Are you able to Find the Right Buyer for Your Business?

Are you able to Find the Right Buyer for Your Business?

If you think finding a buyer for your business is tough, then finding the right buyer can be really complex, primarily because of the differences between the two processes.  The right buyer can not only offer the right deal, but prove a good partner to work with throughout the transition. This is important if you have secured vendor financing for acquiring business and want guaranteed success post-transaction.  It always helps if you and the prospective buyer share a common vision for the business. Here is what we recommend for finding the right buyer:

Assess your buying options:
Whether it’s making someone buy your business or invest in it, a safe bet would be your family members or friends. Any external buyer or a group of employers can come next in the line.  As per a recent study by BDC involving 200 small and medium businesses that had undergone a change of ownership, businesses purchased by family members or employees tend to perform better.  Also, another study indicates that management buyouts are generally successful, as the change of hands is smoother and business culture remains the same.

Get the help of an auditor:
If you feel an internal transition is not possible, you’ll have to find an outside purchaser. It is recommended to get the support of an accountant who usually has a huge database of professionals and business owners, whom they can approach individually to check prospective buyers. Most accounting firms help in linking business vendors and buyers through in-house brokers, with a standard upfront fee in addition to a success fee calculated as a percentage of the business transaction value.
The cost is usually more than the fee if you approach smaller accounting firms, but it’s worth it particularly in larger transactions of $5M or more. Large accounting firms may use their national and international network of prospective buyers and generate higher interest. For small-sized transactions, it is advisable to go for a local accounting firm and search for a buyer as it is relatively economical. Either way, you should look for multiple submissions for comparison. However, the key here is to get the best fit with the people selling your business—probably those who best understand it. 

Throw a wider net:
You can also seek the help of other professionals including business brokers, bankers, industry consolidators, and lawyers to help you provide leads. If you have an advisory board, it can help you search for a buyer as well. If you are a franchisee, your franchisor may help in this case to find the right franchise buyer. Smaller businesses can register with business- for-sales websites, and list their company online, but not before checking the reliability of the directory site.
Industry associations and your network of business associates may help spread the word, whilst also keep things discreet at the same time. You may also approach competitors; an external manager or management team that can raise funds, purchase the company and become its new management (termed management buy-or MBI) or a buy-in-management-buyout or BIMBO that buys out the company retaining the existing management team with a certain stake, and external individuals who will join the team post buy-out. Sign up with GBCORP online today for the best fit when it comes to choosing right buyer for your business.

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