How to Find a Buyer for your Business
Finding a buyer for your business can be a profitable exit strategy. Even if you don’t aim to sell your business in the future, knowing how to find a buyer for your business can be beneficial. But what if you have a change of interest? What if you found a new business opportunity? You will want to have an exit strategy. Selling your business can be a complex venture. It includes a series of considerations and may require you to enlist an attorney or an accountant as you proceed.
It is important to understand that whether you profit from the sale will depend on several factors. They include your business’ structure, the strength of its operation, timing of the sale, and reason for the sale.
There will be plenty of potential buyers who will be interested in your business. But, not all of them will intrigue you with their offers. So, you will have to screen vigilantly until you find the right buyer.
To help you out, we have compiled some tips on how to find a buyer for your business. Keep on reading.
#1 Know what you are looking for in a buyer
You would not want to sell your business to just anybody. Therefore, start with listing objectives other than the purchase price before you sell your business. The objectives may include:
- Allowing you to reinvest in the business in the future
- Retaining employees
- Keeping the business operation running
- Keeping the plant open
- Or do whatever you want once I sell it to you
Your objectives should be clear because there could be a lot that is dependent on your business. For example, if the business is providing employment to people, you would not want to ruin their career. You need to find a buyer who will keep the business operation running. Thus, you need to define the right buyer, depending on your objectives.
#2 Don’t wait for a buyer to come to you
The biggest mistake that the majority of business owners make is they think that the buyer will potentially come to them. While it can happen, it can take a long time. You will have to reach out to potential buyers. It is not that you are selling a house or property where you put a ‘for sale’ sign. Selling a business is a different ball game. Run a process to find the right buyers. You can create ads and search your LinkedIn groups and connections to see if there are any potential buyers who can profit you with the purchase price and cater to your objectives.
#3 Work with investment bankers who manage thousands of buyer relationships
An investment banker can provide you with access to a broad universe of potential buyers. Since they manage thousands of investment accounts on a daily basis, they boast a database of potential buyers who could be of your interest. The best part is that investment bankers have access to buyers from across the globe. If not locally, you can find the right buyer for your business nationally or globally. They can spread the word out for you. Above all, they can add significant value in the form of time saved, increased confidentiality, and higher purchase price. So, if you know any investment banker, who can provide you with insights, don’t miss the opportunity.
#4 Talk to multiple buyers
The majority of sellers close the deal the moment they find a buyer. This is not the right approach. You should talk to multiple buyers before finalizing the deal with a single one. Give yourself the opportunity to screen all the potential buyers who want to purchase your business. Not all buyers will want to abide by your objectives. Some will have their own terms and conditions. So, it is important to explore conversations with different buyers. Buyers actively seek ‘proprietary deals’ and know that they will have to isolate the seller if they want to close the deal. This helps them avoid competition and buy the business on the best terms and for the lowest price. So, shop around and screen the best ones out before you go with a single buyer.
#5 Market your business
Buyers often make decisions based on how your business looks at first glance. So, there is a high possibility that many buyers will pass your offer. So, you may have to market your business’ story to attract potential buyers. You need to ensure that your business is introduced to the right buyers. For this, you need the right business plan detailed enough to cover ‘everything’ that your business is and is not. Most sellers just send out their business’ financial statements. This doesn’t give enough insight into the business. Moreover, they can form their own opinions about your business. Therefore, you must present the correct story of your business, enabling the buyer to know the details.
#6 Avoid concealing your company’s weaknesses
As a seller, you should be transparent with your business proceedings. The buyer will try to uncover everything about your business before making a purchase. It is better that you tell them about its weaknesses firsthand, instead of them finding out on their own. If you try to hide your business’ weaknesses and the buyer finds out about it, they may sue you. Above all, this is not fair play. If there is an issue and the buyer finds out, it will cost you more. You are advised to disclose any issues upfront. It can be anything from terminating accounts, management gaps, single-source suppliers, or customer concentration.
#7 Highlight your company’s strengths
Last but not least, when finding a buyer for your business, present the strengths correctly to the buyers. While it can be difficult, the goal is to maximize your business value to increase the purchase price. Present the strengths based on the buyer portfolio. For example, a buyer in need of marketing capacity will find value in your business if it has a strong marketing front. So, sell your business based on its strengths.
This is all you need to know about how to find a buyer for your business. Make sure to do your background research before finalizing a buyer. You are advised to shop around before making a selling decision.