Even when you’ve determined that your business is in fact exit-able and attractive to the right buyer, that still leaves the challenge of finding someone new to take the business on. For some people, anyone who’s willing to pay enough is good enough – and achieving value for your years of hard work is an obvious priority.
However, a smart businessperson may well have other factors in mind: someone who’s reasonable in negotiations and who you can trust to actually pay up, is pretty essential, for example. Moreover, if your sale price depends on the performance of the business after closing (or you simply want to see your staff do ok after you leave), you want somebody competent. This also matters if you plan to start up another company – anyone who’s done business with you previously, only to watch things go belly-up after you sell, will be cautious about you in the future.
That’s why mining your own professional contacts is often the best way to find an appropriate buyer: someone who knows your industry well will, after all, see the growth potential of your business. Conversely, they’ll also be more keenly aware of its weaknesses. For better or worse, the selling price will more accurately reflect your company’s value.
‘Putting the word out’ that you’re looking to sell isn’t the best strategy. Less-than-scrupulous competitors may well use the news as leverage to take clients. You’re better off identifying specific individuals that have the means to buy your business, and the wherewithal to take it to the next level. Then discretely let those people know you’d be open to an offer. It’s painstaking for sure, and you’ll get plenty of rejection, but you’re less likely to lose clients.
The alternative is to be as open as possible. www.businessesforsale.ie is a directory with a huge amount of companies on the block and ready for bids. Obviously, you can control the amount of information you give out – some businesses list profitability and turnover; more don’t. Every business wants to protect commercially sensitive information, of course. The counter argument is that more concrete offers are likely to come from an advertisement that offers plenty of information, while sparser advertisements attract more tyre-kickers. How much information to give out depends on how much time you have to deal with potentially aimless enquiries, and how sensitive you are about sensitive business details. Listing here, of course, will have the downside of letting the world (and your clients) know that you’re planning on selling.
As a halfway point between the secrecy of approaching a buyer shortlist, and the publicity of an advertisement, you can turn to a broker. The ideal broker should be able to understand your industry, and your business, to work out its potential value and what kind of buyer you can attract. At DCA, we advise many clients through the process of selling and buying businesses, assisting in areas including valuation – and finding that elusive buyer. If you’re taking your first steps towards a sale, we’d like to hear from you. Just contact us to set up an initial meeting.