Have you been approached by an adviser or broker wishing to sell your business?
Are you regularly receiving marketing literature and emails from organisations offering to sell your business for you? Inviting you to free seminars? Claiming to have a unique approach to selling your business?
You will only sell your business once, and it is vital that you get it right first time.
Deciding on the approach to take to sell your business and then deciding who you will appoint are the first critical decisions to take on the road to achieving a successful sale.
There are several different approaches to selling a business: using business for sale websites, brokers or corporate finance advisers and we talk about the differences in these approaches here.
Some organisations claim to have a unique approach to sell your business, others claim to be able to achieve a higher value for your business.
In our experience there is no “magic formula” for achieving a successful sale, beyond using professionally qualified and experienced staff with access the best subscription databases available, undertaking methodical and thorough research and looking at overseas as well as UK buyers. It is only through extensive research conducted by highly experienced staff that the best potential buyers for your business will be identified, i.e. buyers with a strategic interest in your business, the financial resources to fund the purchase and ideally with a track record in successfully completing acquisitions.
Once identified, the most promising potential buyers should be approached directly by an adviser with the skills and experience to clearly explain the acquisition opportunity and why it should be of interest to that prospective purchaser. This discussion will almost always be with a board director or member of the senior management team. This is an important first step in starting to build a relationship with a prospective buyer, understand their motives and the strategic thinking of their organisation and ultimately encouraging them to submit their best offer. Making initial contact with buyers is not an administrative task, but requires the skills and commercial acumen of experienced and professional staff.
If the adviser or broker that you appoint adopts an advertising based approach rather than a research based approach then you are relying on luck and chance that the best potential buyers become aware of the opportunity to buy your business.
Make sure you appoint an adviser who spends more on employing skilled and experienced staff than on producing glossy brochures, running costly marketing campaigns and hosting seminar programmes in expensive venues.
Have you been approached by someone claiming to have a buyer for your business?
You may have been approached by an adviser or broker claiming they have a buyer for your business.
Unfortunately, the adviser is often not acting for a buyer. Rather this is a sales technique for them. They wish to act for you in selling your business. They find they get a better response rate to their approaches by claiming to be acting for a buyer, rather than just offering to help you sell your business. If you respond positively to their approach, you will often find that “their buyer” now does not consider you meet their acquisition criteria, but the adviser states they are well placed to sell your business.
You can usually establish fairly quickly whether the adviser is acting for a genuine buyer. Ask the adviser lots of detailed questions, such as why is the buyer interested in your company and what do they know about the business. Ask the adviser if he knows what your turnover is, how many people you employ and find out how much knowledge the adviser has of your products / services. Ask the adviser to disclose the name of the buyer and describe their business. Ask the adviser to explain why there is a good fit between the buyer’s business and your business.
If you establish that the approach is on behalf of a genuine buyer then read our guidance here on what to do if you have already received an approach from a potential purchaser.