Finding a buyer for your business is one of the greatest obstacles you’ll encounter during your business exit journey--even more so during COVID.
Buyers are still active, they’re just moving very strategically due to the pandemic. There are lots of buyers out there with plenty of money who are looking to move quickly, but others that were affected by the pandemic are being very careful.
With this in mind, don’t lose hope just yet. Today, we’re going to let you in on how to find a buyer for your business during COVID.
Finding a buyer in today’s market
The quest to find a buyer for your business starts with one question: Who is the most logical buyer for your business?
If we had to guess, your answer is likely either your children, employees, or largest competitor.
While yes, sometimes these can be viable options, most of the time, they’re not. Here’s why:
Leaving your business to your children
Before you consider leaving your business to your children, make sure it’s something that they really want. If it’s not, the company will certainly be doomed to fail.
Of course, it’s natural for any parent to think that their children are the smartest and most capable people on the planet. Hell, sometimes they really are.
But this may create friction within your employee base. They’re liable to become jealous, see this act as nepotistic, and start acting out.
After all, do your children have any experience in your industry, and do they possess the leadership skills necessary to run your company? Or would they be better suited following a different path?
Finally, the biggest question to ask is: Do your kids have access to the capital needed to buy your business?
Even if you have 10 children that are all able to magically agree on financing the buyout of your company, their ability to pay that note is entirely dependent on the success of the business moving forward.
We’ve seen a lot of families and businesses ruined by family members taking over. In fact, on numerous occasions, we’ve been called in as an expert witness to help value businesses in the middle of family disputes, partnership breakups, or divorces.
Trust us. Those rarely end well.
Selling to your employees
Selling your business to your employees carries the same risks as selling to your children. If they don’t have the capital necessary to buy the business, the company will be in deep doo doo.
In some cases, selling to your employees is the best option. However, it’s important to remember that there is a major difference between being an employee and being an owner--and not everyone can handle this kind of responsibility.
Becoming acquired by a competitor
Selling your business to a competitor should never be your first or only choice. This is a very restrictive option that will prevent you from creating a limited auction in which multiple buyers can compete to buy your business.
There is a risk that a competitor may want to simply get a closer look at your financials and your employees, so before you start talking with them, you’ll need to make sure you have some air-tight legal agreements and a professional overseeing those conversations.
How to get the most bang for your buck
If you haven’t already headed down the path of one of the above options, you have potentially found yourself just sitting around waiting on the phone to ring. It should be fairly obvious that the Field of Dreams approach won’t grant you top dollar--especially in today’s market.
Without help from a business intermediary, finding a buyer for your business is going to be exponentially more challenging--especially during these trying times.
A successful exit strategy starts by hiring an M&A specialist like NBS.
Leading industry research (and, in fact, our own experience also confirms) that you’ve got slightly better than a one-in-ten shot at identifying the ultimate buyer (13%, to be exact).
The best buyer is generally unexpected, which is exactly why we cast such a wide net when we’re called in as a business intermediary. In fact, we are often called in after some other broker has failed. When we examine the situation, we usually find that that broker simply contacted the usual suspects, maybe a few favored private equity firms, and then failed.
The primary function of a business intermediary is to walk you through the entire process of selling your business--including understanding whether now is the right time to sell, finding the right buyer, expanding your selling options, maximizing your exit price, and ultimately making sure there are no hidden “gotchas” after the sale has been consummated.
You have enough on your plate trying to manage your business during a pandemic. These days, spending time trying to find the perfect buyer on your own could lead to mistakes or operational deficits that significantly decrease your chances of a satisfactory exit.
At NBS, we’re always adding new potential buyers to our database, notifying them when you’re ready to sell and sharing your listing with relevant people looking to buy; however, nearly all of our listings sell to someone we find through intensive research on that listing. For each listing, we devote hundreds of man hours toward finding the best buyer. That effort does not stop until a deal is signed.
Buyers right now are very active. It might be the perfect time for you to get a professional business valuation and start working on your exit strategy.
We’ve helped hundreds of business owners like you successfully sell their business for far more than they ever thought possible. It all starts with our professional business valuation. Attempting to do this yourself or with an inexperienced broker could result in millions being left on the table.
But fair warning… we don’t work with everybody. We wouldn’t be this successful if we tried to be all things to all people. So, we are very selective in the businesses we work with. We offer a free business valuation to qualified businesses.
To see if you qualify, just fill out our business valuation request. We’ll get right back with you to find out more about your business and see if we’re a good fit. If we are, we can talk about what that looks like. If we don’t think we’re a good fit, we’ll at least point you in the right direction.
No pressure. Just straight talk. If you have any questions at all, feel free to contact us.