Finding the right buyer for your business is one of the biggest challenges when selling up.
In the latest edition of our series on exit planning, Chris Hird, Corporate Finance Partner at Haines Watts, discusses how you can secure an external buyer that is the right strategic fit for your business.
Selling your business to an external buyer can be a really attractive exit route. Especially if you’re looking to cut all ties with the business and to secure a lucrative lump sum payment.
However, attracting a buyer is no easy feat. Realistically it can take months, or sometimes even years – so make sure you factor this into your timescales accordingly.
Being prepared help really help to make the process more efficient, whilst still achieving the outcomes you’re working towards.
So, what should you consider when it comes to attracting a buyer?
When it comes to acquiring another organisation, buyers often look within their own sector as their first port of call. This might allow them to grow their market share with access to a similar client base, or maybe acquire a specialism that they don’t currently have in-house.
Being able to spotlight your expertise and USP within the sector will help you to stand out. And knowing who the key players within your sector are, and whether they are looking to acquire, can also give you a huge advantage.
The acquisitions and disposals market is very much about who you know. So now could be the right time to start building your network up and creating relationships in your sector, if you haven’t done so already.
Remember to be strategic in choosing who you want to hand your business over to. It’s not just about achieving the biggest offer, it’s also about the legacy and future of the business and the people who work there. It has to be the right fit for you, as well as the buyer.
If you’re struggling to compile a shortlist, consulting a professional advisor should be your first step. They will help you to target buyers using specialist databases comprised of financial intel. You can rest assured knowing that they won’t make any contact with the target until you have approved of them.
Whether it’s over telephone, email, LinkedIn or networking, use you the communications channels you have to reach out to potential buyers.
Having a one page business summary (also known as a teaser) can really help you here - it can do the talking for you. It’s also a useful touchpoint to leave with the prospective buyer once that initial conversation has drawn to a close, giving them food for thought.
The name and details of the business won’t be released until a confidentiality agreement is signed.
Try not to jump at the first offer you receive. Be strategic. Multiple offers can create a level of competition between the buyers. This can raise the price that they are willing to pay for your business.
So try and speak to as many prospective buyers as possible to help secure the best possible outcome.
Finding the right buyer is a tying process and it’s easy to get caught up in the intricacies. Make sure you’re continuing to build your business throughout. If you have a growth plan in place, don’t neglect any tactics of the plan. If you still have outstanding actions to get your house in order, make sure they are ticked off your to-do list.
Good word will spread about your businesses if you have sturdy reputation, a recognisable brand and a growing customer base. Having an agile, efficient and tidy organisation at the ready will make it easier to market once word has spread.
