FINDING BUYERS FOR YOUR BUSINESS
(No AI / ChatGPT has been used in the production of this article)
In my previous blog post, we looked at "Who will buy your business?" I talked about three types of buyers the financial buyer, the lifestyle buyer and the strategic buyer.
Now let's think about where you can find these various types of buyers who will buy your business.
FINANCIAL BUYER
These buyers are looking to buy an ongoing profit stream. They are predominantly interested in how much profit the business is going to make for them. Remember they will be looking at the PEBITDA (Proprietor Earnings Before Interest Tax Depreciation and Amortisation) and the risk to that profit when they take over as the owner. They like to see numbers going up, especially revenue, gross profit and PEBITDA (or EBITDA for bigger businesses). For more detail on this, read my blog "What is my business worth?".
Financial-type buyers probably make up the majority of prospects out there for your business. However, it depends very much on your business. Most good business brokers will have a database of these buyers and if your business is one that a broker will list, then maybe this is a good way to go. Contact me if you want to know about selling through a broker and what they will want to sell your business. (N.B. I was a broker for 12 years).
LIFESTYLE OR OWNER OPERATOR BUYER
These are people who are looking for a sea change and to have a business which they really enjoy working in. Maybe doing something they are passionate about or have an interest in. A bit like a serious hobby that makes money for them. People who are happy to be working in the business and can see themselves doing what the current owner does.
A good place to find some of these buyers is in your customer base. After all, if they love your product and service and if they are looking to get into business and have a 'sea change' then you just might have the answer for them. Another source is people leaving the corporate world will buy a business which has little or no stress and sustains their lifestyle.
STRATEGIC BUYER
Remember from my previous blog, these buyers are very interesting because they often see value in the business which the current owner doesn’t see. That value can take many forms
• The clients
• Intellectual property or expertise
• Location
• Niche market
• Untapped potential
So who would be interested in some of these elements of your business?
- Competitors
- Suppliers
- Complimentary businesses (Think Unilever & Dollar Shave Club)
- Customers (e.g. to get the product or service at wholesale and make money as well)
- Employees
When you start to bounce ideas around it's surprising how many potential sources of buyers you can come up with. That's why it's a good idea to engage someone external to the business (like me) to help you broaden your thinking. You may also want someone to approach people without them knowing you are thinking of selling.
OPTIONS
You must look at all options when you have decided to exit your business. If you can't get a good buyer on the terms that you want, then you may consider other ways to exit.
- Run the business down and close up
- Sell off all the assets and close up
- Transfer the business to a family member or members
- Take on a partner and sell the business off over time
- Transition to employees
- Merge with another business and exit
- Sell to an investor
- Sell to a 'turn around' specialist or entrepreneur
The BIG question is "Which is the right way for you?" Start by getting a business ready for sale assessment.
Want to know if your business is saleable and how to improve it and make it more valuable? Then click the button below to take my free saleability score quiz. You will get a personalised report based on several areas of your business. It only takes 3 or 4 minutes to complete and is a free service.
If you'd rather have a no-obligation chat then just click the Schedule A Call button.
