There are a lot of factors that determine who is the best buyer for your company. Part of it depends on your goals. Some business owners think they know exactly who the right buyer is. However, we find that it is important to keep an open mind.
The buyer that you think is perfect may not be willing to pay what you want to sell your company for. In addition, the timing might not be right if they have other goals that take priority over acquiring your company. You want to get multiple buyers competing to acquire your company. Before you do that, though it helps to understand:
So before you can know who the perfect buyer is, you need to understand what your goals are for selling the company. Price is certainly usually a factor.
Terms of a deal are usually important: i.e., how much will a buyer pay upfront and how much will they want to pay over time. Is having an upside after the sale important to you? Or do you want to get as much as possible at the closing and get out as soon as possible and not have to think about how the company does over time?
You want to understand the timeframe that you want to sell your company in and work with buyers that are willing to work within your timeline.
Other goals can be significant also, such as are they the type of buyer that will treat your employees and customers the way that you think they should be treated. Will they keep the excellent reputation that you have worked hard to develop. Do they add value to your company in bringing new ideas, products, marketing strategies, etc. that can help to build on what you have. Do they understand your business?
How long of a transition period do you want to provide to a new owner, and does this fit in with the buyer’s expectations and requirements?
Once you have thought about what is most important to you in the sale of your company, then you can have a productive conversation with your Business Broker or M&A Advisor to see if those goals are realistic. They will review your financial information and find out more about your company so they can give you a possible selling price and then develop a marketing strategy to find the best buyers for your company.
When keeping an open mind, it’s essential to realize that the best buyer may come from within your industry or possibly in a related industry that can leverage what you have. The best buyer may also be a wealthy individual with the skills, resources, and contacts to take your business to the next level. It also may be a private equity group that is combining multiple companies in your industry to develop synergies between related companies that can gain more market share with a combination of companies that have different strengths and cover different geographies.
The more open you are about the type of buyer, the more buyers you will have to choose from, and the higher the likelihood is of achieving your goals for the price, terms, timing, etc.
As discussed, your best potential buyers may come from different industries. However, they do have things in common that separate them from other buyers that may not be a good fit. See below for what they have in common.
A top Business Brokerage will have access to many different types of buyers and a marketing program to find the types of buyers that will be right for acquiring your company. Once your M&A Broker has an understanding of your goals, they can weed through numerous potential buyers to only introduce the buyers that are most likely to be a good fit to purchase your company.
However, it’s not an exact science, so it’s essential for you as the business owner to meet potential buyers and make an assessment yourself. With the help of your business broker, you can decide whether you see a prospective buyer as the type of individual or company that you want to work with. The potential buyer will also draw their own conclusions and may disqualify themselves from being the right buyer. So, the first meeting between potential buyer and seller is a two-way street with an opportunity for both parties to get to know one another and decide whether or not they want to continue down the path of a potential sale/acquisition.
Once you have met some potential buyers, the ones that are interested will ask further questions and then submit offers. At that point, your M&A Advisor can help you to determine which offers you want to consider and which you don’t want to pursue. If there are multiple buyers that you like and various offers to consider, you can either have a second round of best and final offers or try to negotiate with one or two candidates to firm up any issues that need to be negotiated. After you agree to terms with the best buyer, then you’ll sign a letter of intent and move on to the next phase of the process.
It’s essential to keep communications open and positive during the due diligence process. You want to make sure that the buyer and their accountant are on the same page with you and your advisors. The first step is to agree on what information will be required during due diligence and how long of a period of time it will take to complete the process. The purchase and sale agreement is sometimes negotiated in parallel to due diligence, and sometimes its negotiated after due diligence is finished or at least on its way to being completed.
The same thing that holds true for due diligence applies to negotiating the purchase and sale agreement. You want to keep the attorneys working together well and moving forward in a timely fashion to close the deal. After the deal is closed, you will provide a transition to the buyer and move on to the next phase of your life.
Synergy Business Brokers has a database of over 27,000 potential buyers for companies in technology, manufacturing, construction, distribution, healthcare, services, engineering, and transportation. If you own a company in one of these industries that has an annual revenue of $700,000 to $40 Million, we offer a confidential consultation. We’ll discuss your goals for selling your company and get an idea of what you are looking for in a potential buyer. We also provide our ideas on how to help you achieve your goals, and we’ll work together to find the right buyer to take over your company.
Please provide us some information on your company by completing our short form or call us at (888) 750-5950. One of our Senior M&A Brokers will discuss our marketing strategy for your company and will provide you with a potential selling price range. There is no fee for our services until your company is sold to a buyer that you have confidence in with terms that you are happy with. For more on us, you can view our corporate video.
