It’s possible that the right buyer for your business is not a stranger. If you’re in a fairly large community, you probably know plenty of people in your industry. Association members, vendors, competitors, former employees, or entrepreneurs looking to invest or expand. There may be plenty of possibilities within a few degrees of separation of your professional network.
Does that mean you could find the right buyer yourself? It’s possible, but we never recommend it. Here’s why.
Confidentiality
The first issue you must deal with isconfidentiality. You can’t simply walk up to other business owners and announce your company for sale. Even if the party is a strong candidate, this may not be the right opportunity or the right timing. It takes all three factors at once: the right person, the right company, and the right time to enter a deal. If one of those factors doesn’t work, there will be no deal. But you’ll have started to talk about your company being for sale without an NDA in place.
Even well-meaning acquaintances can do harm when your company’s potential sale isn’t held in confidence. “Oh – you just signed with Jim Smith’s company? I wasn’t sure he was still in business; he said he was selling when we met at the last association meeting.” That’s a very quick way to instill doubt in current and potential customers.
Once the word reaches a competitor, it can be even more destructive. Your competitor might use the knowledge when bidding against you or to lure away some of your employees. Once your workforce starts to worry about you selling, some of them will start looking for new jobs anyway, despite your reassurances.
Distraction
Dealing with buyers and their multitude of requests for information can be time-consuming. As a business owner, you must stay focused on running a profitable business. Any decline in revenue/profits during the transaction can lead to a buyer wanting to renegotiate the deal price or terms. You are better off avoiding the distraction and having a qualified M&A Advisor or business broker deal with the Buyer. You’ll still need to spend some time answering questions only you can answer or providing some necessary documents, but it’ll save you hours if you have an intermediary to assist you.
Emotional filter
A business transaction can be like an emotional roller coaster for both the buyer and the seller. The initial excitement of the deal can turn into frustration as the deal drags on, and both parties can succumb to taking out that frustration on each other. What started out as a friendly and healthy business relationship can turn sour very quickly. A proficient intermediary in the middle who can help calm nerves and act as a filter can serve as the glue that keeps the deal together and prevents it from blowing up.
That’s why we always recommend working with an experienced business intermediary. Companies like Dream Business Brokers have resources to find qualified buyers for your business without breaching confidentiality. Our marketing masks the company’s identity so we can find a good fit and verify sufficient interest before the prospect ever learns what company is under consideration. We also get NDAs up front so we can make sure all the parties maintain discretion.
We have advanced tools to expand the search for the right buyer. National databases, association membership rolls. Even AI tools that scan company websites to find potential fits in the industry – we can look for buyers while you focus on running the business.
We have successfully kept the deal intact in many situations where the negotiations were tough and the Sellers and Buyers came close to throwing in the towel.
There are exceptions to the rule, of course. We’ve worked with owners who have already found the buyer who’s the right fit for their business. Recently, we worked with a company whose owner had a handshake agreement with another business owner that he knew. Both thought the deal was the right fit; they were both pretty happy with the agreed-upon price.
But as time went on, nothing was happening. The potential buyer was busy and didn’t have the same sense of urgency the seller had. It had been months since they’d decided to do the deal, and it looked like it would drag on for months more.
These are cases where a business intermediary can make a big difference. Even though the buyer and seller agreed, the seller hired us at a discounted fee to move the deal along. This accomplished a few things right away: the buyer got serious about completing the sale, and the seller acquired more options. Bringing in a broker helps both parties focus on getting the deal done. It also puts the buyer on notice that if this deal doesn’t happen within a reasonable length of time, we will take the company to the open market. Competition will almost certainly drive the price up.
The deal moved quickly after our intervention.
Bringing in an experienced business intermediary gives both parties confidence that each is taking the deal seriously. We help the seller and buyer stay on task and keep the communication flowing through due diligence, purchase agreement negotiation, and closing. And, of course, if the deal starts to fall through, we can initiate the process of taking the company to market to find the next group of interested and qualified buyers.
Even if you think you’ve already found the right buyer for your business, our firm can help you negotiate, structure, and finish the sale.
