Business Brokerage .
Steve Skrlac, MBA, CFA
sales representative
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How To Find a Buyer For Your Small Business
If you are thinking of selling a small business there are many different groups of potential buyers that could potentially buy your business. A business brokerage professional can help you identify which buyer profile makes better sense for your particular situation.
Here is a quick summary of the “typical” groups of small business buyers: Competitors Family Complimentary Business Individual
There is some risk with this option so please proceed with caution. A business competitor is often not considered as a potential business purchaser since company owners may think that they may exploit the fact that the business is for sale and use that information in the marketplace or with suppliers. This is a real concern. However, if you do have the type of relationship with your competitor and you think you can approach them about buying your business, there might be some good logic to this. A competitor may be quite motivated to buy you out. They would obtain an “ready made” customer base that they could easily convert over to themselves and start servicing right away. There would also be minimal training and transition required. Because of these reasons, a competitor may be a motivated buyer and be willing to pay you a good price for your business.
Having a family member buy a business is a popular choice for many business owners – but this does not always work out very well. With a family member purchasing a business there is always the risk that financial performance does not meet expectations or perhaps one party feels that they can not negotiate as aggressively as they would like. There are many thorny issues in doing business with family so proceed with caution.
Sometimes a complimentary business would make a great potential acquirer. For instance, a company that produces French pastries may make a great addition to a bakery. Alternatively, a business for sale in Toronto may not directly compete with a similar business in Hamilton, Ontario so these two companies might make a good fit. The synergistic business buyer can usually see the benefits of buying such a business and there is typically less risk in the transaction due to the market knowledge the buyer possesses.
Selling a business to an individual looking to go into business for themselves is another option to sell your company. Most small business owners look to this option when it is time to sell their businesses. These buyers are slightly older (35 or 40+) and have the access to money that is necessary to buy a business. Many of these buyers are first-time business buyers and are new to the process and certainly benefit by working with a business broker to help them through the transaction. Many of these buyers are experienced in the corporate world. And though owning a small business is much different than working for a company there are certainly some transferrable skills that these buyers bring to the table. Also, the buyer who has lost a job or is on a severance is a relatively large group of business buyers. These types of buyers are typically motivated to purchase a business and start on a new adventure.
