The Complete Buyers Guide to Selling a Business: Building the Buyer List

Lower middle market companies (this generally refers to businesses whose value ranges between $10M and $250M) often have an enormous number of potential buyers. Some of these potential buyers are known to the business owner and some might be known by the advisor, but no one’s contact list is broad enough to know every potential buyers.

This means the business owner or broker must have tools and resources to research and access the largest and most qualified data set of relevant buyers. Databases and tools of varying qualities exist out there, but there is no silver bullet. This research process should be exhaustive, not rushed. The broker should review competitors, customers, strategic buyers, private equity firms with relevant expertise, and other sources of highly suitable capital and partnership. This is one of the most time-extensive elements of the process but it often determines the overall success of the sale process. If you don’t approach the best buyers, how can you get the best outcome?

You broker will take the lead in compiling a prospective buyer list. The key is to find an advisor with the transaction experience and industry expertise necessary to build a diverse buyer list that not only helps maximize your potential valuation, but also enable you to achieve you non-valuation transactional goals.

Building the ultimate buyer list is part art and part science, and a qualified advisor can help you identify the most likely buyers for your business from among the thousands that may potentially be interested.

As the list is being finalized, you and your brokers will review it to ensure you are comfortable with all of the buyers on the list and prioritize the list in tiers that the broker uses to stagger their outreach. Some advisors may also recommend “pre-marketing” the transaction at this point, where they may contact a handful of buyer contacts at the top of you r list with which they have long-standing relationships.

To find a qualified business advisor, contact Sunbelt Business Brokers. 

Some of this material was supplied by Axial Forum 

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