One of the biggest challenges to selling a business is getting buyers to move quickly. If you only have one buyer, they will move at their own pace. Leverage is essential in increasing buyer speed and is best achieved by having more than one pony in the race; having multiple right buyers. However, finding these buyers and managing them through the sales process is a time consuming and arduous task.
These are some of the key factors in finding the right buyer, how to manage them through the sales process and potential trade-offs to consider:
1. Identify Your Target Market, Find The Right Buyers
Assessing the Sale Business: Have a deep understanding of the “sale business’s” industry, business model, value proposition, strengths, weaknesses, and how it competes.This helps in determining which industries to target for finding buyers and identifying the buyers who would benefit the most from acquiring the business.
Key Considerations: Do not make your target market too wide or too narrow. As you will either spend valuable time pursuing low probability buyers or exclude interested buyers that you might not typically consider.
Having a deep understanding of the sale business will make finding the right buyer easier.
2. Identify The Right Person At The Right Buyer
You will often find a business that you know is the right buyer and who will benefit massively from buying your business but then struggle to find the right person to engage with. Someone who understands the benefit of acquiring your business, and who has sufficient influence to get the buyer’s management team interested and activated.
To overcome this challenge research the target and its key decision makers well. Research resources include the buyer’s website, LinkedIn profiles of the business and key staff, and Integrated Annual reports.
Key Considerations: There are different types of buyers each with different challenges.
- Professional buyers, for example Private Equity funds, are set up to buy businesses and have clearly defined and well publicised information. However, due to their large demand for assessments, consider explaining how your business fits their mandate and make it stand out in a few words to avoid losing their attention quickly.
- Trade buyers; may never have bought a business. These are often the best buyers as they may be able to extract synergies from acquiring your business that others can’t and, dare I say it, may have a propensity to overpay. Your challenge is that these buyers may not even understand the benefits of growing acquisitively. You will need to find the right person to convince, as these buyers are usually not structured to buy businesses, and finding this entry point is often not easy.
3. Marketing Documentation, Process, and Outreach
Once you have identified the right person at the right buyer you need to reach out to them. This step is crucial as you want to be well prepared and put your best foot forward whilst protecting the confidentiality of your business if it proves to be the wrong buyer.
Trade-offs:
- Too much information, which may compromise confidentiality, and too little information which may not allow you to market the business properly. This is a balance that needs to be well managed.
- The desire to go to market quickly versus making sure you are fully prepared before going to market which takes time. My experience is that you need to have concluded all the prep work before going to market. Once you contact the right buyer you must have all the answers, or they will rapidly lose interest.
4. Manage The Buyer Through a Process
No matter how good the match with a potential buyer, buyers need to be managed through a process. Buying a business may be important but it is usually not urgent and as it is a big decision with many role players, it will take time.
Challenge: There is a fine balance between consistently managing multiple buyers at different stages of progress and keeping appropriate pressure on them while not pestering them.
An effective approach is required in coordinating the efforts of the outreach team, high levels of discipline in consistent follow-up and retaining key information discovered by the outreach team during the various interactions with the target buyers.
Managing this outreach process is best automated and can be done by means of a well-designed CRM.
Finding the right buyer requires a good process which includes analysing the market properly, innovative search processes, solid buyer research, and consistently managing a multitude of buyers and information. This process also needs to be supported by people who are agile and skilled in activating and convincing buyers to move through a process as quickly as possible.
Without the buyers you aren’t going to sell and without the right buyers you aren’t going to sell at a premium.
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