Attracting the Right Buyer
I recently heard a story of a business seller who sold their business for far less than what it was worth. It was a service-based business had been established for in excess of 25 years and under the same ownership for it’s entire history.
It also had a great client base, a stable team of staff and top shelf equipment included in the sale. It was just the sort of business that buyers here consistently ask about.
The buyer’s know that they have picked up a bargain and the business has continued to go from strength to strength under their ownership.
So what went wrong? The former seller of the business chose to keep the sale quiet and sell with an interstate broker because they were worried about their competitors finding out that they were sale. After being on the market for in excess of 18 months, the seller thought that it was undesirable and sacrificed the price. The problems wasn’t the business, it was no one else know about the sale, so there was limited buyer interest.
Confidentiality is often a major concern for most business sellers that I talk to and it’s understandable. However it’s also important to remember that thousands of businesses change hand on the coast every year and often nobody knows about the sale until after the deal is done.
Professional business brokers are trained to keep a sale confidential and only release information to qualified buyers. All buyers who enquire on a business are made to sign a disclosure documents declaring their business interests. Buyer also need to demonstrate that they have the capacity to buy a business so you can rest assured that your personal business information is only going to serious buyers.
Other critical factors to ensure that a seller achieves maximum price is to price the business accurately and market it extensively to gain maximum exposure. When selling a business, basic economics comes into it- supply and demand. The more people that know about your business being for sale, the greater the chance of finder a buyer that is willing to pay a premium price.
If advertising your business brings up that confidentiality fear again, don’t worry- It’s amazing how an advertisement can be written that gives so little away about a business, but yet gives a buyer enough information to make an enquiry. Newspapers, Internet, trade magazines as well as an agencies database should be utilized to get the message out.
Remember the majority of business purchases are here on the coast before they buy a business, so don’t miss the largest target market.