Finding a buyer for your business is never easy. You want to make sure you find the right one – who is also interested in completing a deal. At the same time, you want to maintain confidentiality.
Here are some strategies to consider:
Your Network: In many cases, the right buyer is someone you already know. In fact, the person may be a son or daughter or a friend or even a competitor. It certainly helps that you already know the person, in terms of trust and due diligence.
Yet, there are some problems. Perhaps the biggest is that it may be difficult to negotiate. After all, can you really be nonbiased when selling your company to your son or daughter?
Oh, and if a deal falls through, it could put pressure on the relationship.
Finally, if you decide to sell a business to a friend or family member, it’s important to treat it like any other business transaction; that is, make sure you have clearly-defined contracts.
Employees: Who better knows your business then the employees? If they have the wherewithal to run the company, might they also be qualified buyers? Absolutely. Employees are often the buyers of companies.
Strategic Buyers: These are direct competitors or companies that are in a related industry. Given their familiarity with the business, a strategic buyer can be ideal and may actually pay a premium valuation – because of the synergies.
However, you need to be cautious. Basically, a strategic buyer may be trying to get information about your business. And while confidentiality agreements can help, they are far from foolproof. In other words, it’s good to have strong legal counsel to help out.
Marketing: If none of the above work out, you can try to market your company through various channels.
First, you can place a classified ad in a local paper. The ad should hide the identity of your company and include only a few pieces of information, such as the industry, location and asking price. You can have the contact as a generic email, PO Box or a representative (such as a broker or lawyer).
You might also place an ad in other local publications, such as the newsletter of the Chamber of Commerce. Or, you can put an ad in a trade association newsletter or website.
And yes, there are also a variety of online marketplaces where you can advertise your company for sale. Some include:
Business Brokers: While a business broker provides many services – such as organizing documents, negotiations and so on – they are also helpful in finding qualified buyers.
Final Thoughts
All in all, you have many options when finding potential buyers. Yet, it can still take time to find the right one. It’s important that you take some steps to qualify the potential buyers. If not, you could waste a lot of time.
You can:
- Perform a background check: There are many helpful services, such as HireRight.com. With a background check, you can find out whether a buyer has filed for bankruptcy or has not paid bills.
- References: Call them. Plus, try to see if you can find others who know the buyers – such as through LinkedIn.com.
- Online: And try a simple online search, such as on Google. It’s amazing the kind of information you can find on someone.