When Selling Your Business What Kind Of Buyers Are You Most Likely To Meet?
Selling a business can be an exciting and rather lucrative time. But going through the sales process means embracing the notion that you’ll have to be very prepared for whatever might be thrown your way. A key aspect of preparing to sell your business is to know what types of buyers you’re likely to encounter.
It is only logical to anticipate the types of buyers you may be dealing with in advance. That will allow you to plan how you might potentially work with them. Remember that each buyer comes with his or her own unique desires and objectives.
The Business Competitor
Competitors buy each other all the time. Frequently, when a business is looking to sell, the owner or owners quickly turn to their competitors. Turning to one’s competitors when it comes time to sell makes a good deal of sense; after all, they are in the same business, understand the industry and are more likely to understand the value of what you are offering. With these prospective buyers, a great confidentiality agreement is, of course, a must.
Selling to Family Members
It is not at all uncommon for businesses to be sold to family members. These buyers are often very familiar with the business, the industry as a whole and understand what is involved in owning and operating the business in question.
Often, family members are prepared and groomed years in advance to take over the operation of a business. These are all pluses. But there are some potential pitfalls as well, such as family members not having enough cash to buy or not being fully prepared to run the business.
Foreign Buyers
Quite often, foreign buyers have the funds needed to buy an existing business. However, foreign buyers may face a range of difficulties including overcoming a language barrier and licensing issues.
Individual Buyers
Dealing with an individual buyer has many benefits. These buyers tend to be a little older, ranging in age from 40 to 60. For these buyers, owning a business is often a dream come true, and they frequently bring with them real-world corporate experience. Dealing with a single buyer can also help expedite the process as you will have fewer individuals to negotiate with.
Financial Buyers
Financial buyers are often the most complicated buyers to deal with, as they can come with a long list of demands. That stated you should not dismiss financial buyers. But just remember that they want to buy your business strictly for financial reasons. That means they are not looking for a job or fulfilling a lifelong dream. For financial buyers, the key point is that your business is generating adequate revenue. They are looking for a business with a management team in place not relying on the owner for day to day operations.
Synergistic Buyers
A synergistic buyer can be an excellent candidate. The reason that synergistic buyers can be such a good fit is that their business in some way complements yours. In other words, there is a synergy between the businesses. The main idea here is that by combining the two businesses they will reap a range of benefits, such as access to a new and very much aligned customer base.
Different types of buyers bring different types of issues to the table. The good news is that business brokers know what different types of buyers are likely to expect out of a deal.
Copyright: Business Brokerage Press, Inc.
Read MoreWhat Kind of Buyers are You Most Likely to Meet?
Selling a business can be an exciting and rather lucrative time. But going through the sales process means embracing the notion that you’ll have to be very prepared for whatever might be thrown your way. A key aspect of preparing to sell your business is to know what types of buyers you’re likely to encounter.
It is only logical to anticipate the types of buyers you may be dealing with in advance. That will allow you to plan how you might potentially work with them. Remember that each buyer comes with his or her own unique desires and objectives.
The Business Competitor
Competitors buy each other all the time. Frequently, when a business is looking to sell, the owner or owners quickly turn to their competitors. Turning to one’s competitors when it comes time to sell makes a good deal of sense; after all, they are in the same business, understand the industry and are more likely to understand the value of what you are offering. With these prospective buyers, a great confidentiality agreement is, of course, a must.
Selling to Family Members
It is not at all uncommon for businesses to be sold to family members. These buyers are often very familiar with the business, the industry as a whole and understand what is involved in owning and operating the business in question.
Often, family members are prepared and groomed years in advance to take over the operation of a business. These are all pluses. But there are some potential pitfalls as well, such as family members not having enough cash to buy or not being fully prepared to run the business.
Foreign Buyers
Quite often, foreign buyers have the funds needed to buy an existing business. However, foreign buyers may face a range of difficulties including overcoming a language barrier and licensing issues.
Individual Buyers
Dealing with an individual buyer has many benefits. These buyers tend to be a little older, ranging in age from 40 to 60. For these buyers, owning a business is often a dream come true, and they frequently bring with them real-world corporate experience. Dealing with a single buyer can also help expedite the process as you will have fewer individuals to negotiate with.
Financial Buyers
Financial buyers are often the most complicated buyers to deal with, as they can come with a long list of demands. That stated, you should not dismiss financial buyers. But just remember that they want to buy your business strictly for financial reasons. That means they are not looking for a job or fulfilling a lifelong dream. For financial buyers, the key point is that your business is generating adequate revenue.
Synergistic Buyers
A synergistic buyer can be an excellent candidate. The reason that synergistic buyers can be such a good fit is that their business in some way complements yours. In other words, there is a synergy between the businesses. The main idea here is that by combining the two businesses they will reap a range of benefits, such as access to a new and very much aligned customer base.
Different types of buyers bring different types of issues to the table. The good news is that business brokers know what different types of buyers are likely to expect out of a deal.
Evaluating A Red Hot Market For Business Sales
A new article from BizBuySell entitled 2018 Set New Small Business Sales Record as Buyers Eagerly Exit Corporate World is quite an eye-opener. Simply stated, businesses, all kinds of businesses, are selling like never before.
If you have a business and you are considering selling, then realize that now truly may be the time to jump in and put your business on the market. The market is historically hot. All one has to do is take a closer look at the numbers as outlined by BizBuySell.
In 2013 the number of closed small business transitions stood at 7,056, whereas in 2018 this number jumped considerably to 10,312. Between 2016 (10,312) and 2017 (9,919), there was a massive jump. Last year only continued to build on the already impressive numbers from 2017.
It is also important to note that the last three years have all been record years. Brokers have noted that there has been an increase in both the number of buyers and sellers.
Of course, all of this leads us to some questions. Why are so many business owners looking to sell and why now? Why is the market so very hot?
In the BizBuySell article, a surveyed owner commented that purchasing a business has become easier for first-time buyers and this factor has, in part, contributed to the noticeable increase in sales volume. Other factors cited in the article include Baby Boomer retirement, and owners selling to avoid dealing with rising operational costs stemming from increased minimum wage requirements and health care. Some of those surveyed also included pending regulations, both political and economic, as factors in their decision to sell.
On the buyer end, it appears that two factors are at play, namely, buyer confidence that the economy will continue to be strong and greater access to capital. Additional factors, such as business owners noting that their businesses were performing better, also likely contributed towards making 2018 yet another record-breaking year.
For those looking to sell, there is considerable good news. The median asking price and sale price have both continued to trend upwards. Business brokers are optimistic about the future and for good reason. Whether you are considering buying or selling a business in the near future, it is prudent to talk to an experienced business broker. A broker can help you navigate this very hot market and make a deal that is beneficial for all parties involved.
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