Did you know that only 8% of listed businesses sell each year?
Business owners decide to sell their company for a variety of reasons. You might experience a bout of poor health that kickstarts big lifestyle changes. Retirement age may start to loom worryingly closer. Or maybe your exit strategy was always to sell eventually.
Whatever the grounds for making the sale, this phase of letting go and getting the right price for all the blood, sweat and tears you’ve pumped in over the years can be full of emotion. It’s an exciting, albeit nerve-wracking adventure, and knowing where to start is tricky.
Where IS the best place to sell a business these days? Don’t be part of the 92% of companies that don’t get bought. Make sure you’re as informed as possible to get the best start.
Using a Business Broker
Brokers assist both parties in the buying and selling of private companies. They’re the middlemen.
But don’t let that put you off – there are pros and cons to using a business broker.
Industry-specific brokers are likely to have a list of buyers on standby; professionals who are ready and waiting to buy. This can be a great start in your search for a quick and easy sale.
As well as the standard upfront fee to be paid before listing your business for sale, many brokers also charge a success fee, usually on a sliding scale. The higher the sale price achieved by the broker, the more they get paid.
This motivates brokers to get you a good sale price but it comes with a caveat. Brokers may inflate the price, aiming to sell as high as possible to get a bigger success fee, and therefore reduce the pool of prospective buyers and potentially slow your sale.
Brokers who don’t charge a success fee, however, tend to forgo any active marketing once your business is listed because they’ve already been paid. No bites from the market, no point putting any more time in.
Business brokers also tend to be awkward gatekeepers, asking potential buyers to jump through hoops before affording them a conversation. Whilst this could save you from wasting time with superficial buyers, it might also put off interested parties who simply need more information before they can take the next step.
I’ve had this happen to me before – I found a company I was interested in buying, but the broker wanted me to fill in numerous forms before even having a conversation. Business buyers don’t have time to waste!
What can be the biggest advantage of opting for a broker sale is the ability to move quietly. For some businesses, rumours that you’re selling up can be enough to spook clients, customers and staff. Uncertainty in business is worrying, and talk of selling, mergers and acquisitions and potential disruption to the supply chain, (depending on where you are in it), can send people twitching.
Online Groups and Forums
More and more business owners are reaching out to pools of potential buyers online.
LinkedIn, Facebook and business forums host groups of investors and business acquirers on the lookout for their next purchase.
Unlike using a broker, posting your business for sale in this realm opens you up to your plan becoming public knowledge – word of mouth goes far, after all. But, online groups are a hot market of professionals who have the means to buy what you’re selling. It might still suit you to choose this route.
Market It Yourself
The third route to selling up is the DIY approach.
Do you already know someone who might want to buy your business? A professional friend of a friend? Part of your supply chain looking to expand in your direction? Even a competitor may be worth considering. The right buyer could already exist somewhere in your network.
With no middlemen involved, the next step is simply to contact potential candidates directly. Drop them a line outlining your suggestions, welcome their feedback and see what happens.
Like online forums, the big drawback of this method is that your potential sale becomes the talk of the town very quickly. But, it can work out really well if you know of businesses owners already in the market for something new and can contact them discretely.
Going down this route myself in the past has served me well. When selling my debt management company, I reached out to my network and ended up in a two-way bidding war! The company sold quickly, and for a good price.
Thinking Of Selling?
Many business owners don’t think about selling until it’s too late to get started.
If selling up is, or becomes, your next big business move, plan to sell 3 years ahead to give yourself that long to prepare.
And whatever you do, don’t stop investing!
Deciding to pull back and stop pumping money into your business, because it’ll be out of your hands soon, is a BIG mistake. It damages the saleability of your business at its core. Invest in your business to optimise its value leading up to going to market. It’ll make for an easier sale and see that you get what it’s worth.
Make sure you understand both what your business is really worth and the entire buying and selling process. How do people actually buy a business? Where will people go looking for an acquisition? Find out in my previous post.
Need A Little Help?
Selling your business can be hard going and downright stressful, especially if it’s your first time. We’ve addressed three routes to market in this blog post and, as with most things, it’s up to you to work out which route will suit your circumstances best. Different strategies work best for different types of businesses.
With the right support, from someone who’s walked the walk, selling up can be an easy ride. The Business Success Consultant has started up, sold and bought numerous businesses and has seen it all.
Want a stress-free sale? Book a call with Clive and let him guide you through the business sales process with less stress…