What motivates them and how will they know they your business is the one that will make them successful?
There is a right place to market the Business and a right way to approach specific types of buyers.
If any of you have watched the TV show the Apprentice you may have seen Donald Trump give the example of selling a car, and how ill-considered it is not to spend the $10 needed to wash the car before putting it up for sale. The same with selling a business, The quality of the presentation, how it describes the business and the competitive environment and how it is described to potential buyers showing them the benefit of owning the business all contribute to a greater possibility of finding the buyer who is willing to pay more for the business. It also helps with the valuation process where the Appraiser thinks as a surrogate buyer(s).
To take the car analogy further imagine a 7 series BWW being sold parked under a tree covered in bird droppings and leaves on the corner of Brier Creek Parkway and Highway 70. Imagine the difference in your level of trust if that same car were being sold immaculately clean in the lot of a BMW dealer. You know you will be paying more at the Dealer –but – Tell me why you will be willing to pay more?
Buyer Behavior, Synergy & Decision Gates
Now the business is prepared, positioned priced and on the market, the potential buyers look at the business. Remember that we have done all of the work up front so that everything is done professionally – a failure to being prepared will reduce trust and that buyer will be gone.
The buyer has their own reasons to buy. We need to know why and what will motivate them to buy. It may be to:
- Take the strategic offensive
- Defend the current business
- Leverage existing strengths and relationships
- Achieve measurable synergies and efficiencies
- Get an advantageous financial structure EG debt leverage
So what are the ways that your Business Broker (hopefully Murphy Business and Financial) can help your business and create Key success factors? The buyer should know how the business will be after an acquisition, and they should have presented to them:
- Clear and communicated strategy
- Leadership and organizational team
- Process organization and planning
- Detailed integration concept plan and metrics
- Disciplined reporting systems with quantifiable metrics
- The Business Valuation
The buyer has Criteria and Decision Gates
- Financials, Financials, Financials – Just like the location, location, location in Real Estate. –is the first gate – Can business performance be understood? Will the return on investment meet their needs?
- Is it in their price range and ability to pay?
- Is the cash flow sufficient to justify the price with the risk of changing owners?
- It the business a natural fit? Can the Product, Service, Geographic Location, Add-on product, or Personal skill set; help them decide that they can run the business successfully?
These are all factors and determine if a buyer is good for your business and if a business is good for the buyer.
To summarize; Buyers acquire a business for their own reasons, and it is often the task of the business broker to determine which buyers are qualified while protecting the confidentiality of the business and how to motivate potential buyers to a successful transaction.
Thank you for your feedback since the last article regarding your needs to discover how to navigate through the current economic climate. Next time we will address some suitable common tactics, and you are always welcome to contact me with some specific needs.
