Finding the Right Buyer for Your Business: Strategies for Success

When selling your business, finding more than one potential buyer and managing them through the sales process is a key component to success, it is however a time-consuming and arduous task.

One of the biggest challenges to selling a business is getting buyers to move quicker and if you only have one buyer, they will move at their own pace. You need leverage to get buyers to move quicker and this is best achieved by having more than one pony in the race, having multiple right buyers.

Here is an analysis of some of the key factors influencing the success of finding the right buyer for your business and managing them through the sales process, we also explore the various trade-offs and challenges inherent in this process.

1. Identifying your target market, finding the right buyers

Assessing the Sale Business: A deep understanding of the “sale businesses” industry, business model, value proposition, strengths, weaknesses, and how it competes is vital. This knowledge helps identify which industries to focus on to find buyers and which buyers would gain the most by buying the business.

Key Considerations: Do not make your target market too wide as you will spend valuable time pursuing low-probability buyers and, in the same breath, do not make the target market too narrow, you will often be surprised by who is interested, and why.

Having a deep understanding of the sale business will help optimise finding the right buyer.

2. Identifying the right person at the right buyer

You will often find a business that you know is the right buyer, someone who will benefit massively from buying your business, and then struggle to find the right person to engage with inside the buyer’s business. The person who understands the benefit of acquiring your business, and who has sufficient influence to get the buyer’s management team interested and activated.

To overcome this challenge research the target and its key decision makers well. Research resources include the buyer’s website, LinkedIn profiles of the business and key staff, and Integrated Annual reports to name a few.

Key Considerations: There are different types of buyers each with different challenges

On the one hand, you have your professional buyers, for example, Private Equity funds, who are set up to buy businesses. Your entry point for finding the right person to assess potential acquisitions is clearly defined and well publicised. Your challenge is they have a lot of opportunities to assess and if you can’t explain effectively how your business fits their mandate, or make it stand out in a few words, you will lose their attention quickly.

On the other hand, you have trade buyers some who may never have bought a business. These are often the best buyers as they may be able to extract synergies from acquiring your business that others can’t and, dare I say it, may have a propensity to overpay. Your challenge is that these buyers may not even understand the benefits of growing acquisitively and may need to be convinced. You will need to find the right person to convince, a challenge as these buyers are usually not structured to buy businesses, and finding this entry point is often not easy.

3. Marketing documentation, process, and outreach

Once you have identified the right person at the right buyer you need to reach out to them. This step is crucial as you want to be well prepared and put your best foot forward if it is the right buyer, and you want to protect the confidentiality of your business if it is the wrong buyer.

Trade-offs:

The first trade-off is between too much information, which may compromise confidentiality, and too little information which may not allow you to market the business properly. This balance needs to be well managed.

A further trade-off is the desire to go to market quickly versus making sure you are fully prepared before going to market, which takes time. My experience is that you need to have concluded all the prep work before going to market. Once you contact the right buyer you must have all the answers, or they will rapidly lose interest.

4. Managing the buyer through a process

No matter how good the match is with a potential buyer, buyers need to be managed through a process. Buying a business may be important but it is usually not urgent and, because it is a big decision with many role players, it will take time.

Challenge: Consistently managing multiple buyers at different stages of progress and finding a balance between keeping appropriate pressure on them, to keep the process moving, and not pestering them, is a fine balance.

It requires coordinating the efforts of the outreach team, high levels of discipline in terms of following up consistently at the appropriate and agreed times and retaining key information discovered by the outreach team during the various interactions with the target buyers to ensure a consistent and effective approach.

Managing this outreach process is best automated and can be done using a well-designed CRM.

Conclusion: A well-managed process backed by people skilled in outreach. Finding the right buyer requires a good process which includes analysing the market properly, innovative search processes, solid buyer research, and consistently managing a multitude of buyers and information.

This process also needs to be supported by people who are skilled in activating and convincing buyers to move through a process as quickly as possible.

Without the buyers, you aren’t going to sell and without the right buyers, you aren’t going to sell at a premium. 

Andrew Meerburg is the Head of Corporate Finance at The CFO Centre.  Andrew is passionate about helping businesses grow using Corporate Finance solutions.  His focus is on the buy and sell side advisory services, exit planning, finance raising, valuations, BEE ownership structuring and financial modelling.