Here is the question of the day….who is going to buy your business?   Not who should buy it, but who, realistically, would benefit from the purchase and actually put down cash.  This evaluation is very, very important in planning the eventual sale of your business.  In order to maximize your business value then, you need to consider who your buyer will be and build your exit plan around making this the most appealing business for their needs.

Here are a few steps that you should do when you are considering a buyer:

First, write down all your competitors, employees, family members, friends, suppliers, and vendors that you think are successful enough to be able to buy you out.  This means that they have liquid cash where you do not have to finance a majority of the sale.  Anyone will buy your business if you will 100% finance… the deal, but, the truth is, you will never see the money.  Don’t forget, even if they don’t have the liquid cash and they have great credit then a SBA loan can make up the difference between cash down and your seller financing.

Second, take that list of potential buyers and come up with a list of reasons why it would be a win for them to acquire your Company.  This can be due to increase market share, customer list, add on to their business line, cash flow, employees, and many other ideas.  Just write them down after each name.  Some buyers might want to partner with you, some might want to hire you, and some might want only a division or part of the Company.  On a side note, I represented a landscape company that had a construction and maintenance division.  It was hard to find a buyer who wanted both, due to it’s size, so we split it up and sold both of them individually for more than we would have together.

Third, start to target your buyers by meeting them and bringing it up in casual conversation.  Mention it at a social setting that you were thinking about them and how much better their business would be if they bought your Company.  It’s all about networking and being open minded.   You never know where people are in the business without asking. In fact, most business transactions happen off the market.  Your buyer might not be someone on your list but instead someone they know and referred to you. 

Finally, the best time to look for a buyer is when you don’t have to sell.  Start talking early and networking with people on your list.  Ask them what they would be looking for in a business to acquire and if they ever would consider buying a Company to grow.  My best advice is to start looking around early so when it comes time to exit you have at least a few people you can call.

This entry was posted on Friday, May 1st, 2009 at 2:39 am and is filed under Sell Your Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.