Want to Sell Your Business? You Need an Expert Marketer
Note: In case you’re just joining us, this is Part Two of a series on how to sell your business. Before reading this post on marketing your business, take a couple of minutes and read Part One: Getting a Valuation if you missed it.
After securing an accurate valuation, the next step is to begin letting potential buyers know that your business is available. No one can buy your business if they don’t know it is for sale. There are several simple and direct ways to do this:
- Word of mouth
- Your social media accounts (Twitter, LinkedIn, etc.)
- Small business sale websites
However, if you’re not careful you could prematurely tip your hand to your customers, vendors, and competitors. Customers and vendors may back away assuming that you’re selling because something is wrong, and competitors may begin looking for ways to take advantage of whatever weakness it is that must be leading you to abandon ship.
The safer and wiser way to begin marketing your business to potential buyers is to enlist the services of a reputable advisor who can act as an independent third party (i.e. free from conflicts of interest).
- They have gone through the process many times before, freeing you from the headaches involved.
- They have experience helping sellers make their business as attractive as possible, helping you get the highest possible selling price.
- They have an active database of potential buyers and can act as a matchmaker.
Our Process For Marketing Your Business
The process we have used at Southard Financial to successfully market dozens of businesses to sell for top dollar looks like this:
- We first perform a thorough vetting of your business and financials to arrive at an accurate valuation. (See the Step One post if you skipped it earlier.)
- Next, we put together a document called a Confidential Information Memorandum (aka “the Book”). The goal is to give the potential buyers plenty of information so that they can give a valid indication of interest in buying your business. You don’t want to waste time pursuing buyers who are only “kicking the tires.”
- We begin screening potential buyers through a couple of methods:
- Our internal database of 1400+ contacts. Over 30 years in this field, we have built a substantial network of investors and businesses. And we have the ability to reach out directly to the ones who would be the best fit for your opportunity.
- Business marketing portals subscribed to by private equity firms, strategic buyers, and families looking to invest. For these listings, we put together a teaser of the deal that has limited information but enough (e.g. geographic location, industry, size, etc.) to help narrow the focus of who will see the listing.
All buyers are not equal. Southard Financial screens for the ones who are truly interested.
Imagine that 100 people respond to a teaser posted on a portal. Several of them will inquire about the business, so we have them sign a Non-Disclosure Agreement to protect your privacy and keep things quiet (something you probably won’t get by just running an ad on Craigslist).
We then send them “The Book” and then give them time (typically 3-4 weeks) to respond with an Indication of Interest which lets us know a range of how much the buyer would be willing to pay.
After we sift through these responses, we will pass them on to the seller…in this example, let’s say 15 Indications of Interest. The seller may then choose to speak to 8 of these via phone. Based on these interviews, we will help the seller narrow the field to the top 3 to 5.
At this point, we secure a more detailed Letter of Intent which spells out how they intend to pay and what the exact deal structure will be. These documents can be long–often close to 20 pages–but they are not a binding contract. Once these are in, we give the potential buyer 60-90 days to do their due diligence. Thanks to modern methods and resources, this time frame is not nearly as long as it used to be!
Finally, the buyers will do a site visit. Depending on the situation, we often meet with them in an offsite location during the day, and then tour the business at night to help keep things below the radar.
After meeting face-to-face, the business owners will then decide who they want to sell to. It isn’t always the highest bidder, and many sellers have walked away from deals that looked good on paper after actually meeting the buyers in person. But, by using an experienced transaction advisor, you can be certain that everything has been done to ensure that the transaction goes as smoothly as possible.
Finally, Southard Financial will work with the business owner’s legal advisors to review and edit the transaction documents to be signed at closing.
Southard Financial is the trusted advisor that sellers and buyers can count on to walk with them through the entire process, including marketing your business. When you’re ready to sell your business, give us a call (901-761-7500) or connect with us online. Our business is all about getting you the most money for yours.