Blog
Selling your business - How to do it
December 1st 2010
In my last blog I explained why a “scattergun approach” to selling your business is virtually always the wrong approach. Here I explain how a list of target potential purchasers should be drawn up.
Although many very small businesses are sold by advertising them widely, this is not the right approach for most businesses and certainly not for those businesses with multi-million pound turnovers. Last month I explained why it is the wrong approach to offer the business to numerous companies in your sector and that it is much better to concentrate your own time and efforts and your advisers’ efforts on those potential purchasers that are most likely to put a good offer on the table.
So how should a list of potential purchasers be drawn up? This can only be done by detailed research. This is a key stage of the selling process and it is important that as much time as necessary is spent doing this research. The list is put together in several stages. Initially a long list of potential purchasers is created, which is then refined down to a short list, “cherry picking” the best to go on the final list of potential purchasers to be approached.
The initial long list is created using research tools including comprehensive databases. A good starting point is to identify companies worldwide that have previously acquired a business similar to your own. For example, a US company may be identified that has already acquired a business in your sector in Germany and another one in Spain. A second stage of the process is then to identify all companies in the UK that meet the criteria that we have set.
It is fairly typical to then have a list with 200 to 300 potential purchasers on it. These should then be narrowed down to a much shorter list, often of 15 to 25 potential purchasers who would then be approached. Many of the companies on the final short list will have carried out acquisitions before and all will have been pre-vetted to ensure they are likely to have a good reason to acquire your business and that they can afford to make the acquisition.
To narrow down the initial long list, it is necessary to review each company individually, reviewing their latest published financial information, their websites and considering their history of acquisitions.
We have a successful track record of finding buyers for businesses, but there are no shortcuts – it is vital to do full and proper research to get the best deal.
