How To Find a Buyer For Your Business [Step By Step Guide]
Finding the ideal buyer for your business can be challenging. There’s always a lot to consider to determine if they are the right one.
Since every potential buyer is unique, here's a handy step-by-step guide on how to find a buyer for your business—one who shows maximum buying interest at the best sale price possible.
TL;DR - How to Find a Buyer for Your Business
It can be easy to find a buyer for your business if you follow a blueprint like the one highlighted in the following steps:
Explore your ideal buyer profile
Conduct market research to spot prospective buyers
Prepare your business for sale
Come up with a robust marketing strategy
Evaluate bids from willing buyers
Engage vetted buyers
Engage with shortlisted potential buyers
Complete post-approach activities
We’ll discuss each step in detail later in the article. Before we get to it, we acknowledge that finding buyers for your business isn't easy, but you can do it with some help.
At Exitwise, we help you shortlist and manage an enthusiastic team of M&A experts who can help you value your company, market it to a pool of buyers, and get the best sale price.
We can introduce you to experts in your industry, such as tax accountants, wealth advisors, M&A lawyers, and investment bankers, to help with the valuation, marketing, and closing of the sale.
Schedule a free consultation with our experts to kickstart the process of finding the best buyer for your business.
Importance of Finding the Right Buyer
As much as you want to sell your company fast, finding the right buyer is essential to your business goals and your company's future. Let's check out why you should emphasize getting the right buyer.
Continuity
Most buyers of businesses acquire a business to continue growing it. However, some don't keep the business alive. If your exit planning involves ensuring the continuity of your company, find a buyer willing to further your legacy.
Continuity is vital for keeping your employees employed, suppliers engaged, and your customer base served without disappointing breaks.
Ease of Collaboration
The business sale process becomes easier with the right buyer. A troublesome buyer will waste your time and may not buy at all.
You can expect a great buyer to collaborate easily with you during buying activities such as expressing interest, due diligence, negotiating terms and payments, and closing the sale.
Fetching the Best Sale Price
The right buyer understands that your business is essential to you and how its future can potentially transform many lives. With this in mind, the buyer is more willing to buy your company at the best price.
Types of Buyers
There are two main types of business buyers: strategic and financial. The type you opt for is crucial because it can determine whether you'll still be involved in the daily running of the business.
Strategic Buyers
A strategic buyer buys a business to improve it and their overall business. They are typically business owners in the same niche or industry, and they seek to improve their market share or product offerings.
Strategic buyers are willing to pay more for your business because they know it will add value to their existing businesses.
You can expect a clean exit from a strategic buyer since they fully integrate your sold business with their own once the transition ends.
Some notable strategic buyers include people who have made an unsolicited offer to buy your business, suppliers, and competitors whom you notify that your business is for sale.
Financial Buyers
A financial buyer buys a business to improve it and later sells it at a profit. They run your business as one of the investment assets in their portfolio.
Financial buyers usually expect the seller to continue working with them after they buy the business, which can be disadvantageous if you are looking to retire.
Additionally, they might only be driven by profits and care less about the legacy of your business or its social impact on the employees, customer base, and the community where it operates.
Private equity firms are a great example of financial buyers.
How To Find a Buyer for Your Business
Now that you know the importance of finding the right buyer and the main types of buyers, let's explore the crucial steps to get that right buyer.
1. Explore Your Ideal Buyer Profile
An ideal buyer profile guides and helps you narrow down the buyer search.
You'll want to consider the qualities in a buyer that are important to your business and what type of company or individual is best for your business.
Will the buyer be a strategic fit? Will their vision for the business align with yours to ensure its continued success?
What's their industry experience? If the buyer is familiar with your industry, your business is more likely to continue running.
Is the buyer financially capable of buying and running your business? What's their M&A financing plan?
2. Conduct Market Research to Spot Prospective Buyers
Research can help you find potential buyers sooner. Research trade publications, famous websites, industry associations, and your competitors to see if any buyers are willing to acquire your type of business.
The research also helps you understand what business buyers are looking for in a business, their motivation, and whether or not they are financially capable.
Since researching on your own can be challenging, consider getting help from M&A experts to access their database of prospective business buyers.
At Exitwise, we connect you with M&A experts with industry-specific databases of potential business buyers. This shortens the time it takes to find a willing buyer. Schedule a no-obligation meeting with us to get the ball rolling.
3. Prepare Your Business for Sale
Your exit strategy should include preparing your business for sale.
Consider crucial activities such as:
Organizing your financials
Improving your infrastructural and operational efficiency
Meeting all your regulatory and legal requirements
Evaluating your growth potential
Fine-tuning your sales pitch to your buyer's needs and your business’s value proposition or attributes.
4. Come up with a Robust Marketing Strategy
After positioning your business for sale, have a strategy to get your business out there and noticed.
For example, you can market your company on online marketplaces, social media, relevant publications and websites, or your industry contacts.
If you don't have internal human resources for marketing your company, consider hiring M&A professionals.
5. Evaluate Bids From Willing Buyers
Carefully consider each bid you receive, including the terms of the sale.
You'll want to check the proposed purchase price, the buyer's financial resources, industry experience, plans for the business, and payment terms.
While you might be tempted to accept the highest bid price, it's important to consider whether the buyer has plans to continue your business.
Again, M&A experts can help you with the bid evaluations and negotiations.
6. Engage Vetted Buyers
The buyers you select will require additional information from you, such as your value proposition, reverse due diligence report, unique market advantages, growth potential, and profitability.
Be sure to provide them with the necessary information as soon they sign a non-disclosure agreement.
7. Engage with Shortlisted Potential Buyers
After checking out the bids and vetting buyers, shortlist the ones you'll engage with further. You'll attend meetings, present your company efficiently, and negotiate the terms of the sale.
When presenting your business to buyers, focus on what the buyer wants rather than what you are selling.
For example, if your buyer wants to expand their product or service offering, tell them about all your products or services and how they are a major strength in your company.
You'll also want to answer any questions and address any buyer's concerns during their due diligence.
8. Complete Post-approach Activities
Engaging with your shortlisted buyers is not enough. You must engage them after the initial approach to maintain the momentum of the process until you remain with the one who pushes to the end.
Here's what to do:
Communicate with the buyers regularly, answering their extra questions or concerns.
Prepare for buy-side due diligence and its results. Be ready to provide extra information like business plans.
Have professionals ready to draft a sales agreement and close the sale.
How to Sell a Business without a Broker
The truth is, you don't always need a broker.
Instead, you can use an M&A team, which we can help you hire and manage.
We at Exitwise can help you find a team of wealth advisors, tax accountants, investment bankers, and M&A attorneys who understand law, business strategy, and finance better than business brokers.
A more in-depth knowledge of these aspects means it's easier for the M&A advisors to handle the complexities of large business sales while still putting your objectives and interests first.
The M&A advisors we connect you with are also better placed to bring you a more strategic buyer because they have a global network of partners and potential buyers.
Schedule a free consultation with us today to learn how we can connect you with M&A experts who can find the best buyer for your business.
How to Determine if a Buyer is Right for Your Business
Consider the following aspects to determine if a buyer is right for your company:
Buying history: A buyer with a successful buying history for other businesses is more likely to suit you.
Acquisition knowledge: If you have to coach your buyer through the M&A process, they may not be the best fit.
Asking the right questions: You can tell the buyer is genuinely interested if they ask the right questions rather than fixate on mundane issues.
Deep understanding of their needs: Can they properly articulate what they need regarding value, quality, and efficiency?
Ease of working with: They are likely a great buyer if they are not confrontational during negotiations.
Frequently Asked Questions (FAQs)
You may still have questions about the topic. Here are a few common ones.
Should I Use a Business Broker to Find a Buyer?
You can use a broker if you have a trusted source. However, you may have to pay highly for their service. Business brokers typically charge 8-10% of the selling price, which is quite high.
Instead, you can work with a firm that connects you with M&A experts. At Exitwise, we can help you find a team of M&A experts with a global reach, which can mean finding a buyer sooner.
What Are the Best Platforms for Listing My Business for Sale?
The best platforms to list your business for sale include:
What Information Should I Prepare for Potential Buyers?
You'll need to provide potential buyers with information such as:
Cash flow statements
Balance sheets
Tax records
Third-party business valuation
Reverse due diligence report
Cultural and environmental values
Turnkey employees and management
Key contracts, leases, and loan agreements
Current suppliers
Customer distribution details.
How Long Does it Typically Take to Find a Buyer for a Business?
It can take between one and six months or up to a year to find a business buyer.
The time spreads between your internal process before and after declaring the intention to sell, marketing, buy-side due diligence, qualifying potential buyers, and finally accepting an offer.
Conclusion
Our guide on how to find buyers for your business will help you during your M&A process to make a faster sale at the highest possible sale price.
Looking for a faster way to find buyers for your business? Schedule a chat with our M&A advisor to start the process of hiring and managing your dream M&A team, who can connect you with the best buyers out there.
