Numerous factors go into finding the right buyer for your company. In the process of selling your business, you may find someone who seems like the perfect buyer, but for one reason or another, negotiations fall through. Maybe the timing isn’t right, they aren’t willing to pay your asking price or abide by your terms. When trying to find the right buyer it is important to understand your goals, set realistic expectations and be a little flexible.
Your Goals for Selling
Determine what you wish to achieve by selling your business. The right price is usually a big factor. You want to make sure you earn enough money from the sale to meet your financial goals. You might also have a timeframe in which you want to sell and you will need to find someone who can work within your timeline.
Deal terms are also important to consider. Do you want to offer seller financing, so you have the potential to earn more after the sale, or do you want to get out and not have anything to do with the company as soon as possible? Many buyers request that the seller stay with the company for at least a few weeks until they are acquainted with the business. Think about the amount of time you want to stick around to help transition them.
Also, consider how a potential buyer will carry on the legacy of the business after you sell. You may wish to find someone that you think will treat your employees and customers properly. Will they keep up your reputation and build upon what you have accomplished? Are you ok with the idea of selling to a competitor? Sometimes companies will buy out others just to absorb them and reduce competition. Are you comfortable with that sort of deal?
Characteristics of Your Ideal Buyer
Every seller has different preferences. Some may not even care who buys their business, as long as they get the profit they want and get out. Here are some attributes of an ideal potential buyer.
- They are financially qualified to purchase your company
- You are comfortable with them and they are easy to work with
- They have an understanding of your company or the industry
- They are willing to sign a confidentiality agreement and non-disclosure agreement
- They have ideas for growing the business
- They ask good questions and have good reasons for being interested
- They are willing to work with your terms and timeline
Working With a Business Broker
After you figure out your goals for selling, discuss them with a business broker to see if they are achievable. A business broker will know the local market and be familiar with companies of all sizes and industries. They will use their expertise to help you determine if your goals are realistic. The broker will review your financial information and perform a business valuation to figure out an asking price. From there, they can help you develop a marketing strategy to expose your company to as many qualified buyers as possible.
Working with a broker allows you to have access to a much larger pool of buyers. It is a lot easier to find your ideal buyer if there more people are looking at the business. Many sellers who try to sell on their own get caught up with only dealing with one buyer at a time. In these situations, the chances of finding the perfect suitor are drastically reduced and you might have be a lot more flexible with your terms. Many DIY sellers spend a lot of time on a single buyer, only to have negotiations fall apart, and then they have to start the search for another buyer all over again.
Ultimately, you will decide which buyers you want to work with. However, a business broker can weed out those who either do not meet your criteria, or are not financially qualified, so you only have to deal with the ones who are a good fit. They will also have all serious buyers sign a Non-Disclosure and Confidentiality Agreement, which is critical to protecting private and sensitive information about your business.
Negotiating With Buyers
At some point, you will receive offers from one or more potential buyers. Your business broker can work with you to determine which offers you want to pursue. If you have more than one offer, you can ask for a second round of offers to get their highest and best, or try to negotiate with the offers you have. The broker’s experience in negotiations can put you at a strong advantage when dealing with buyers as they act as a buffer between you and them. Once you agree to terms with one buyer, you will sign a letter of intent and move to the process of due diligence.
During the buyer’s due diligence phase, it is important to keep an open line of communication with the buyers. You must agree on what information is to be shared during due diligence, and the timeline for sharing it. Make sure that the buyer and their advisors are on the same page as you and your broker. Sometimes the purchase and sale agreement is negotiated at the same time as the due diligence period, and sometimes it is done afterwards. Once the deal has closed, you will help to transition the buyer and then be able to move on to the next stage of your life.
Finding the ideal buyer can be done, but it becomes a lot easier with the professional assistance of a business broker. Understand that during the sale process you might have to be flexible with some of your criteria and be open to changing some of your terms. However if you decide to sell on your own, you will have much fewer inquiries. You might get lucky and find a great buyer, but without backup offers, you will be under pressure to be more flexible without your deal terms and the price than you originally planned. If a buyer senses that they are the only one you are dealing with, they will have the leverage. Overall, finding a buyer for your business as quick as possible, and selling for the price you want is a lot more likely when you have a business broker guiding you through the process.
Right now, there are a lot of investors looking for successful proven businesses in the Fort Myers, Naples, Sarasota and Tampa Bay areas. If you own a business in Southwest Florida, it is a great time to sell it. This is especially true since the SBA is offering some great incentives to buyers who close on a business by the end of September. Contact CIBB to find out what your business is worth and discover if selling right now is a good idea for you. Our consultation is free, and without obligation. Every business is unique, but our brokers have over 100 years of combined experience working with all types of companies and are experts on the Southwest Florida market.
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