Blog
Finding a buyer for your business - comparing the different approaches
June 1st 2011
In this month’s blog we outline an important difference between the corporate finance adviser and business sale broker approach to finding buyers for a business.
Preparing to sell a business, presenting it well and finding the most suitable buyers is a lengthy and involved process. As there are different approaches to selling businesses, it important to choose the one which is right for the size and nature of the business being sold in order to get the best deal for the vendors.
As a general rule business sale brokers typically advertise businesses online or via a mass sector mailshot, adopting a volume based approach to finding buyers. This approach can be successful for small unincorporated businesses and the smallest limited companies where the trade is simple or a large array of other identical or similar businesses exists (e.g. chip shops, pubs, small garages, small hotels). However, this is the wrong approach for profitable companies with a turnover above £1 million.
The approach professional corporate finance advisers such as Strategic Corporate Finance adopt when selling a business is very different to that of a business broker. The approach is to focus the adviser’s and client’s efforts on a short list of those potential purchasers worldwide that are most likely to make the best offers and that have the ability to deliver the deal. It’s about the quality of potential purchasers approached rather than the quantity contacted. That does not mean to say that a large quantity of potential buyers are not considered during the research stage – they are, but through examining detailed information on each potential purchaser (including financial information and their track record of carrying out acquisitions) the corporate finance adviser makes a professional judgement on which potential purchasers should be included on the shortlist of those to contact. In effect, the shortlist of those to approach has been pre-vetted before they are contacted.
The sale of a business is usually the largest and most important transaction that anyone will carry out in their life. Vendors should ensure they maximise their chances of getting the best possible offers and should choose a purchaser that has the ability to get the deal to legal completion. Choosing the right approach to selling the business is one important aspect.
