I am a business owner who wants to sell my business. I am not sure how to find a buyer. What should I do?
Work out what kind of person will buy your business. Do they need a specialist skill? What attributes are required to make a go of it?
Assess whether the business is too dependent on you. Make sure your shoes are not too big to fill. The more a business depends on your special talents, the less desirable it will be.
Look at things from a purchaser’s point of view. What would you worry about if you were a purchaser?
Is there anything that you can do to strengthen the relationship with your customers? How strong is your lease? Get help to identify all the risk areas.
Be able to say clearly how the business works. In most cases a few key factors will drive a business’s profit and explain why it is successful. What are the factors that drive your sales? What makes your product or service attractive? What is it that you do differently from others? Is the formula proven? What would your strategy be, if you were staying on? How would you take the business to the next level? What knowledge do you need to hand over to the buyer? Can you do this easily?
Pay attention to the numbers, and be realistic about pricing. Many business owners overestimate the value of their business due to emotional factors. Of course you want your life’s work be worth a lot! However it is best to use objective information to price your business realistically. If you over-price your business, you may put off the best prospects. If the business is on the market too long, potential buyer may start to think there is something wrong with it. Another more subtle risk is that while waiting for a sale, the business owners can take their eyes off the ball, resulting in things going downhill.
Even when you can get a purchaser excited about your business, there is no guarantee that they will seal the deal. The purchaser will be surrounded by advisors who will err on the side of caution, and who can potentially hold the deal up, or kill it. How can you mitigate ‘advisor risk’? Well, it is best to go in well prepared. It’s a great idea for example to have a sale and purchase agreement written up in advance, so that you know how you will approach the details. Also, this is an opportunity to shape the deal even before the purchaser’s professionals get involved. Being prepared for questions helps to streamline the process. Think about what the purchaser’s lawyer will be looking for.
Work out carefully what you (and your agents) can and cannot say about your business with integrity. When you sell a business, you will naturally want to present it in its best light. But if you go too far, the purchaser may hold you responsible for not meeting their expectations. Non-disclosures can result in deal-killing loss of trust issues. Or you might be sued.
Engage the best people you can to help you, and make sure that your strategy is realistic and cost-effective.