Ready to Sell? Master the Art of Attracting Top Offers

With the benefits of enlisting a good broker in mind, it’s worth understanding what they do to sell a business. This is so that you can support them and give them the time they need to carry out their work. The marketing of a business for sale falls into two phases – preparation and going to market – each of which has its own set of tasks.

Preparation

There are some preparatory steps that a successful marketing campaign needs to go through before your business is formally taken to market. The purpose of this is to ensure the sale runs smoothly and there’s minimal opportunity for your future buyer to negotiate the price downwards down the line. It involves a great deal of planning and analysis, but the work carried out now will pay dividends later in both time and money.

Now, before you can look outward at marketing your business, you must have analyzed your company’s financial and legal situation. Completing tasks such as creating a detailed financial forecast with your broker (to demonstrate future performance and investment returns), conducting a thorough legal audit (to prevent delays or price reductions during buyer due diligence), and undertaking a tax audit (to give buyers confidence and avoiding costly negotiations). Only once you have completed these tasks, would I recommend embarking on the three steps needed to market your business for sale successfully.

Step 1: The potential buyer long-list

In this stage, you need to explore who’s in the market to acquire your business. Your broker should create a long-list of potential buyers that includes everyone who could possibly be interested in it, with the aim of narrowing it down later. To do this, they extensively research relevant companies, private equity firms and individual investors, and evaluate them based on their strategic goals. Are they actively looking to grow through acquisition? Would your business be a good strategic fit for them? Do they have the financial firepower to make a deal of this size, or are they too small or already overstretched? The broker will also review their track record in terms of acquisitions they’ve made in the past. Are they experienced in buying companies, and would they be a helpful partner on the selling journey?

At the end of this process, your broker has a long-list of qualified potential buyers who might be interested in, and capable of, acquiring your company. But that doesn’t mean you would necessarily want them to approach the whole list. There may be customers or suppliers on there or other businesses that you wouldn’t want to learn your company is up for sale. There might also be a business or two that you’d feel unhappy about entrusting your employees to. It’s always your decision, which is why your broker reviews the list with you to gain your approval and make adjustments as necessary.

Step 2: The information memorandum

This is a comprehensive document that ultimately gives interested parties from the long-list of potential buyers the detailed information they need to decide whether they’re interested in making an offer (subject to due diligence) to buy your business. To create it, your broker uses the information from your financial, legal and tax audits and data on your market position and future growth opportunities to make it as compelling as possible. They want anyone who reads it to see your company as a tempting acquisition opportunity, and this involves working with copywriters and designers to create an impactful communication piece. Your broker can, and often will, tailor it to appeal to different types of buyers.

Step 3: The teaser document

However attractive your broker makes your business look in the information memorandum, there’s no getting away from the fact that it’s a long document and it will be hard work for a busy entrepreneur to read on spec.

Maximizing Confidentiality in Your Business Sale Process

When selling your company, confidentiality is key. You don’t want every potential buyer to know that your business is on the market. It’s best to only disclose your identity to those who are genuinely interested. This is where your broker comes in, as they will extract essential information from your business memorandum to create a teaser document, also known as an executive summary. This document provides a brief overview of your business sale opportunity while keeping your identity anonymous, enticing potential buyers to learn more.

The teaser document is sent out as the first step in the “go to market” phase, sparking interest and attracting serious acquirers. It serves as a sneak peek into what your company has to offer without revealing too much, ensuring that only qualified buyers proceed further in the process.

Importance of Thorough Preparation in Selling Your Business

Successful business sales require thorough preparation at every stage. Collaborating with your broker to identify the right buyers, create a comprehensive information memorandum, and craft an enticing teaser document is crucial. By taking the time to present your business in the best possible light, you can attract serious offers and preserve the value of your company.

Overall, maintaining confidentiality and highlighting the strengths of your business are essential for a successful sale. By following these steps and working closely with your broker, you can increase the likelihood of finding the right buyer and securing a favorable deal.

Image by Drazen Zigic on Freepik