Finding the Right Buyer
One of the most basic definitions of a “market” is a place where buyers and sellers exchange a good, commodity, service, security, or another item. Believe it or not, there is a large market for buying and selling businesses! Sometimes, however, it can be hard to find the right buyer for your business. Hopefully, this article will help! Make sure to consult with a professional like Peak Business Valuation, business appraiser Texas, for more tips on finding the right buyer.
Considering your Options
When it comes to selling your business, there are lots of options. Generally, it is a good idea to explore transitioning your business to a key employee, a friend, or a family member before taking it to the open market. Doing so may allow you a smoother and faster transition. However, you may not be able to get top dollar selling it to a close or related party.
Understanding Types of Buyers
There are several types of buyers. These buyers generally fall into one of three categories.
- Individual buyers – employees or family members
- Strategic buyers – customers, suppliers, or competitors
- Financial buyers – companies or individuals with money to invest
Each buyer presents a unique opportunity for you as a seller. Some buyers may be more qualified than others. While some buyers may offer a higher purchase price. Depending on what your goal is, you will want to explore the options of selling your business to each of these different buyers. A professional like Peak Business Valuation, business appraiser Texas, can help you. For more information, see Selling to a Financial vs. Strategic Buyer.
Taking your Business to Market
Once you have decided to take your business to the open market, you have a few options.
- Try and market the business by yourself
- Work with a business broker to sell your business
There are a variety of websites where you can post your business. You may not get the traffic or the offers you would like depending on the popularity of the website. This may lengthen the time it takes to sell your business if you are trying to sell it on your own.
You could sell your business with a business broker. Doing so will help you market the sale of your business. There are several pros and cons to working with a business broker. One of the largest cons is that you will have to pay a broker fee of around 8-10% of the listing price, which can be a hefty chunk of change!
Once you have several buyers interested in the business, it is important to screen, or see what each buyer has to offer. Don’t just look at what their dollar offer is, although that is important as well. Take the time to look at and qualify each buyer’s offer. Get to know them and get a gauge of how they would fit running the business. Understanding each buyer, their financial situation, and their goals with the business will be important “screeners” for helping you find the right buyer.
A business for many owners is similar to their child. They have worked with it, nourished it, and have watched it grow over the last several years. As such, you want to sell your business to a person who will appreciate the work you have put in and will continue to run the business successfully. This could take quite some time. On average, this process can take anywhere from 6-10 months. Take your time and don’t rush things! If your business is valued and listed appropriately, there will be interested buyers.
Knowing your Business Value
Getting a business valuation from a qualified professional like, Peak Business Valuation, business appraiser Texas, can help you better understand what the value of your business is. It will also help you know what it can sell for on the open market and will give you a good idea of what to list your business for. A business valuation can be a strong negotiating tool when it comes to the negotiation process. Obtaining a business valuation can also help you understand how a buyer will view your business.
Building a Relationship with the Buyer
If you build a relationship with the buyer, you will be able to see how they act and react under different circumstances. This relationship will help the transfer of the business be much simpler and smoother.
Finding the right buyer is a lot like the story of Goldilocks and the Three Bears. It takes time to market your business. It takes time to get to know the buyers before you can find the one that is “just right!” Schedule a consultation call with Peak Business Valuation, business appraiser Texas, to learn more tips about finding the right buyer for your business! Read “Choosing a Buyer for your Business” for more tips on choosing a buyer.Schedule Your Free Consultation Today!