To sell a company you will need to find good buyers. Mid Market businesses usually sell to other businesses and they need to find their buyers through a Direct Contact process. This method is distinctly different from businesses sold through our brokerage division where buyers are found through online advertising.
Sometimes owners of Mid Market businesses place their companies on listing websites and quickly find that they get little interest. To find quality buyers for Mid Market companies you need a systematic system that produces targeted buyers who will be interested in your business.
First of all, let’s define what a good buyer is. A good buyer is identified as a company with the required financial resources and a business where the acquisition of your business to it’s business will increase financial revenues significantly.- think an increase of 50%, 100%, 200% even 300%
Good deals are where the combination of the two businesses make a substantial difference to the combined cash income of the businesses.
1. So how do we find these buyers?
After we have identified our typical target company grouping we start to find the actual companies. M&A is about dealing with decision makers. We use Linked IN a lot to find these people and make direct contact. Linked IN Sales Navigator (the premium service) enables us to find leads very quickly. Once you know the filtering stages you can quickly create a list of potential buyers.
We use a very well thought out messaging flow that quickly engages us with the right people.
2. Right buyers and wrong buyers
So what are wrong buyers? A very significant part of any M&A professionals job is to filter out the serious companies from the time wasters. There are 3 main types of wrong buyers
1. The buyer who is not serious. There are lots of people who like looking at businesses but never actually buy one. Why nobody really knows but they exist and there are lots of them. Frequently they maybe working for a company that has resources but the individuals looking have never actually taken a deal forward. If you look you are doing your job. If you recommend a deal you might be making a mistake that might cost you your job. In the states these ‘buyers’ are called tyre kickers!
2.Confidential Trolls. One of the easiest ways to get information on a market sector is to be a buyer. If there are companies for sale in the sector you are interested pretend to be a buyer and you will get lots and lots of confidential information-free.
Giving these companies your information is time consuming and you are probably just helping a future competitor.
Protecting a companies Intellectual property is one of the main reasons to use a professional M&A firm.
3. Liquidity. We want deals where money is handed over. We want our buyers to realise that doing a deal will substantially increase the buyers financial income flow and that therefore the capital to be given to the seller is a short term hiccup. As a professional M&A firm we have contacts with many Venture Capital companies and banks and other lending sources. providing the buyer has the resources we can find the finance for them to make the deal.
All negotiations are about having competition to use in the negotiation process. It is no good negotiating with a single buyer- the buyer will quickly realise this and adjust his financial opinion accordingly. You need lots of buyers from a long list of potential targets to get a good deal.
A professional M&A firm will be the only way you will get the necessary scale for the negotiation. Finding the buyers requires resources and expertise that you will only find in an experienced M&A firm.
Buyers are dead keen one minute and not the next. Potential buyers come and go which is why you need a constant systematic system working on target companies. The usual time period to complete a deal is 6 months and in that time frame potential companies will be nurtured to bring them to the negotiating table.
Post from Entrepreneur