In our previous articles, we have covered getting ready to sell your business, how to value your business, and now, we’re putting our focus on how you can find the right buyer.
You need to make your company as attractive as possible to get the best price and avoid a lengthy wait to garner interest. But you’ve already done this. Now you need to find a buyer. Where do you look? This process can be approached in two ways:
This means that you assume full control of the sale, which involves being responsible for:
• Collating any documentation a prospective buyer will need to see, including audited accounts, tax returns, property leases and contracts.
• Valuing the business
• Dealing with any professionals involved, such as solicitors and accountants
• Deciding when, where and how to advertise
• Arranging viewings
• Negotiating the eventual deal.
You will also have to decide who should know your plans, since rumours of an impending sale could panic staff, customers and suppliers.
The main benefit of selling privately is that you won’t have to pay as many fees. You may also feel that it’s worth the extra effort to retain control over the kind of buyer who takes over.
However, you should be aware that this method will inevitably require a lot of time and energy; it’s vital to have effective support in place to make sure the business runs smoothly during this period.
Selling through a broker
A broker will organise the entire sale, liaising with other professionals, deciding how and when to proceed with each stage and negotiating with the buyer. This is an understandably popular way to sell a business and, as such, there are many brokers available, so be sure to choose one you can trust.
Although there is no licensing scheme for brokers in the UK, there are still many factors you can consider to determine whether a broker is right for you. The main thing to look at is the types of businesses they have sold recently, and were their previous clients satisfied with their deals?
In addition, they must:
• Demonstrate that they will familiarise themselves thoroughly with your business.
• Explain how they can tailor their service to your needs.
• Be able to answer any questions you have about what to expect.
Not least among the advantages of using a brokerage service is how much less stressful it is, knowing that a competent professional has responsibility for a protracted and often complicated process. Using a broker enables you to continue with your normal duties, giving your business the best chance of staying in good shape for its new owner.
You must be aware, however, that such services are expensive. You might pay a retainer or a commission of the sale price, or a combination of both. You also might find different levels of service for different prices. Additionally, the idea of handing over so much control to an outside agent can sometimes be very difficult to accept; only you can decide which is your best option.
Conducting the negotiations
Effective negotiation is an important business skill, providing an advantage when dealing with suppliers, service providers and, crucially, when selling a company. In that situation, there are several points to remember:
• Begin with an informal meeting to build a rapport with the potential buyer
• Share key points clearly and honestly about the health of your business without giving up any bargaining chips
• Have a flexible approach; be aware that the essence of negotiation is compromise on both sides
• Be confident and level-headed. Trust in your assessment of your company’s worth and know what you will and won’t accept before you get to the table
• Don’t allow any high-pressure tactics to creep into the negotiations. Remember, it’s a conversation, not an advertising campaign.
As well as adhering to these rules, make sure you leave yourself options for negotiation on price by neither undervaluing nor overvaluing the business. Also, be thoroughly prepared for any questions the buyer may pose.
Selling your business is an almost inevitable part of the commercial cycle, but it can be a very positive experience if you approach it systematically. By committing to the optimal path for you and your company, you can achieve a deal that will make handing over the keys far easier.
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