When it comes time to sell your business, it’s easy to think that exits only happen to other people. You’ve possibly made a few approaches to likely buyers, you’ve dropped hints at industry do’s that you’re ready to leave, maybe you’ve even told your staff that you’d like to sell (extra tip, don’t do the last one, unless you think they can buy it themselves).
Here’s your 6 best strategies on getting your business sold. Resources are available at the end of the article.
Make a list of targets
You’ve probably fantasised about Company X buying your business already. The chances are they may not be interested, but part of the game is to work your numbers. Use a Hit List like the one we link to at the end of this article to list all of the companies you want to hit up. You need to contact as many businesses as possible that are similar to your fantasy company and then think about the types of companies that would like to be that company themselves. The company that ends up buying your business will likely be someone you’ve never thought of, so you need to really double down on businesses that need to grow, you can check out recent press in Google News on your industry niche and see if any companies are talking about M&A and acquisitions. Companies that have just made an acquisition are quite likely to want to speak to the next target also, so don’t be shy and get in there.
Set up a new email address
There’s a certain amount of sensitivity around selling a business, agency land can be a small place and people talk. Loose lips sink ships, as they say. The best way around this is to set up a new email address to use to contact target companies. If you email from your current email address and say “I’m thinking of selling the business, would you be interested,” then you have no onus on the recipient to not disclose your information. Buy a new domain name and set up an email address with our first name AT domain and go about this with a bit of discretion.
Find the right person to contact
Nine times out of ten you are looking to speak to the CEO, but depending on the structure of the company it could be someone else. If the founder is still in the business, but has taken a step back to be Chairman, it’s likely them. If the business is actively doing M&A and they have a department for that, it will be the Corporate Development person. Either way you can use LinkedIn and one of several browser plugins like RocketReach to find the right email address for your contact. The CEO is the main person to contact if you’re lacking any other kind of information on who it’s likely to be, get the email address you need and add it to your Hit List (resource at the end).
Get an NDA signed
Again, there’s some discretion involved in selling a business, you don’t want the company you’re speaking to to think that your information is something to be bandied about at the next office party. Outline the business, it’s assets and interesting characteristics without revealing the name of the business. Send an NDA at the same time and ask for the NDA to be signed before you reveal more detail. If they are genuinely interested in learning more and they’re not just a tyre kicker they’ll be happy to sign an NDA or some version of it to get to the juicy info. A note on NDAs, they’re not even remotely watertight, legally maybe, but in reality they’re not. BUT, they do set the tone that your information is to be respected. At best the clock is ticking and at some point it will leak into general circulation.
Prepare an IM
An IM or Information Memorandum is document that discloses top line information about a business, it should touch on everything from general strategy of the business, finances for the last 3 years, shareholders, pictures of work done, clients, anything really you think reflects well on the business. There are plenty of examples of IM’s out there. Someone at a massive company once told me that the IM that I’d sent out and had a hundred meetings set up from wasn’t a proper IM, it is all relative. If you’re pitching a creative business your events agency, then they are not looking for 10 pages on the financials. You want to appeal to the business leader that you are contacting. An IM weighted down with graphs and tables won’t sell your business as well as nicely photographed work that you’ve completed for clients, snazzy offices and good looking staff (if you have them!)
Chase people up
My god, I hear this so often: I emailed them but they didn’t reply. FFS these are busy people, even with the best of intentions, you may be sat in a pile of flagged emails that one day our target exec will get to. It doesn’t hurt to chase people up within a few days if they haven’t yet replied. You don’t have to sound needy or desperate, just a quick: “checking you got my email below” is usually enough.
It isn’t rocket science finding a buyer for a business, but it does take a lot of work to get it done. Often, business owners have enough on their plate without getting involved in selling the business directly. This is where the Exit Agency can help out. However, if budgets are tight or you don’t think there’s a big valuation for your business and you want to hold on to your percentages, then getting some interest in your business and finding a buyer is quite straight forward. If you do have any questions, get in touch, or if you need some help but a bit more hands off, then try the Exit Accelerator.
Here’s the resources, as promised, a Hit List template in Google Docs. Make a copy and use yourself. Just add your email to unlock the link.