Marketing Your Business For Sale
House owners who have not been by the method of selling a business earlier than often underestimate how vital it's to market, and package their business in order that it appears engaging to potential buyers.
As with all things pre-sale, the advertising and marketing have to be totally deliberate and executed perfectly. The intention of the marketing period is to drum up enough curiosity amongst qualified and motivated buyers to extend the possibilities of you enterprise being bought for a premium. As many owners, business brokers and intermediaries will testify that is easier stated than done.
When attempting to market your business the first place you should start as an owner is your own market or industry. You will know your market better than any business broker or intermediary, and as a result you will know which individuals, companies or organizations will deem your business to be an attractive proposition. If you have decided to market and sell your business without the use of a professional you will have to find the balance between reaching the widest audience possible and keeping the fact you are selling away from those who do not need to know. Marketing your business is a delicate task, if you do not reach enough buyers you risk entering negotiations at a disadvantage, however if you market to aggressively you may end up alerting vendors, creditors, customers and key members of staff. The fact you are selling, may, in their eyes be an indication that something is wrong, and your business may turn south at the worst possible time. Therefore the marketing of your business must be carried out with the least possible disruption to the day to day running of the business. Once you have identified a list of suitable candidates you would be interested in speaking to you need to draw up a non-disclosure agreement, and following that the chief marketing tool which is the sales memorandum.
There are hundreds of businesses for sale at any given time. To make your business stand out, you need to provide potential buyers with information that will help them to make an informed decision. A descriptive and well-organized sales memorandum will help in the sale process. The sales memorandum is a document which is used to present your company in the best possible light and motivate prospective buyers into making a solid enquiry. The sales memorandum can be prepared by a business broker, an accountant or by the owner of the company. This document will highlight all the positive things about the business and will help whet the appetite of potential buyers.
The sales memorandum contains information on areas of possible growth and expansions, information on the unique value proposition of the business, its current assets, and key financial figures such as profit, cash flow, and total debt.
This document should be tailored to the individual or group you are in negotiations with as different aspects of your business will appeal to different types of buyers. If you are talking to a company that offers a similar product, or serves a similar customer base as your own, your marketing efforts should be tailored to present your company as one which has a large and loyal customer base, in doing so you will increase the appeal of your company in the eyes of the buyer, and this will help you achieve a better deal during negotiations. If the buyer is part of a large conglomerate which is more interested in acquiring the skills of your workforce or the technology your business runs on, then these are the things which will need to be stressed within any marketing material you produce and put before them.
During the sale process sellers must make sure that the business' physical state is in good condition. The premises should be clean, the inventory current, and the equipment in good working order. It is very easy to overlook this during the marketing process, so you should ensure that your office, factory or shop is well kept, as a neglected workspace is often a red flag to many buyers. It is important to sell or dispose of any unused or outdated stock, apply a lick of paint to the premises, and check that all machinery and equipment is up to date and working, as many buyers will factor the cost of replacing or fixing damaged machinery into their offers. Doing this will create the impression of a well organized business and this inspires confidence in prospective buyers.
Many owner managers do little, if any marketing once they have decided to put their business up for sale and as a result they can end up leaving money on the table when they eventually sell their business. Marketing, when done effectively can increase the amount the owner finally receives as there is nothing which drives up the price of a business then a room full of motivated buyers bidding on the business.
