The sale of your SME: How to find the right buyer

Are you ready to advertise the sale of your company and start your prospection? Several options are available to you.

After planning for the sale of your SME, now is the time to weigh your options in order to choose the right buyer. There are different profiles and depending on what you are looking for, this step can be difficult and complex. Here are some tips to help you make an informed decision and find the right buyer.

1.    Choose your potential buyers carefully

Before outlining lists of potential buyers, an understanding of the criteria that will allow you to rank the most interesting ones from those who are less interesting is essential. These criteria are illustrated below. Of course, their importance will vary according to the situations.

In addition, to facilitate the preparation of that list, it is important to understand the main categories of buyers that exist and their main characteristics, as shown in the following table:

Main characteristics and categories of buyers

  Family Member Management Team External Individual Financial Institution Strategic Buyer
Timeframe1 3 to 6 months 6 to 9 months 6 to 12 months 3 to 9 months 3 to 9 months
Complexity Low to Medium Medium to High Medium to High Medium to High Medium to High
Valuation and Pricing Low to Medium Medium to High Medium to High Medium to High High
Cost of the Operation Low Medium Medium to High Medium to High High
Distinctive Purpose
 of the Buyer
Ensure the continuity of the business Take control of the business Realize the dream of becoming an entrepreneur Maximize returns within a specific time threshold Enhance the business’ growth and development
Other Specific Element High selling price scale Operation also called "MBO"2 Transition period will be needed Change in management culture can be predicted Intense periods of integration and upheaval

2.    Start your prospection

With the acquired knowledge, you are now ready to search for and list the potential buyers, and thus start prospecting. Key prospecting activities are:

  • The creation of a ledger to record and to document marketing activities;
  • The adoption of a code name for the transaction;
  • The preparation of a time schedule that will need to be reviewed periodically;
  • The approval of potential buyers and identification of reasons justifying the exclusion of some;
  • The preliminary assessment through the Teaser or the contact person;
  • The meetings (in discrete settings) and discussions to determine the reliability of the buyers and to start the negotiations;
  • The transmission of the Confidential Information Memorandum following the signing of the Confidentiality Agreement;
  • The visit of your company by the buyers;
  • The answers to additional questions from the buyers prior to submitting a proposal.

Finding the right buyer, based on your situation, and the vision you have for your SME will enable you to make a sale that will meet your needs. Throughout this process, do not hesitate to seek the advice of specialists to support and guide you. With their expertise, these specialists will prevent you from making costly mistakes and help you move forward with confidence.

 

Patrick Whalen, MBA, Vice President – Financial Advisory Services

Note: The masculine form is used throughout this article solely in order to simplify the text.

 

(1) Does not include the planning time required by the seller before starting the sale process.

(2) Management Buy Out.

 

Also read:

Are you ready to sell your SME? 5 questions to ask yourself before taking action

How to plan for the sale of your SME: 5 key elements

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