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Don't Sell To Just Anyone
Who is your ideal buyer?
By Rick McDonald
We have already figured out what our business is worth, but what does that mean? Value is in the eye of the buyer, not the seller.
We need to understand Who the buyer is and what value means in Owner Land as well as Buyer Land. And in Buyer Land, the value is further refined by what kind of buyer we are talking to. Think about a piece of art you bought years ago, what is it worth now?
Does it have a function? Does it have sentimental value? Is it pretty, in your eyes? Is it a “hot” collectable? To whom may it be “significant”? What value does it hold?
It all depends upon who you ask and that purpose they might place on it in coming up with a value on your piece of art.
75% of the “Small” (<$5 Million in sales and typically 10 or fewer employees) and “Lower Middle Market” (typically defined as $5 -$50 million in sales and 10 - 100 employees) business owners are “Baby Boomers” (ages 58 -74) and most of these owners are looking to transition out of business.
They have a “need” to sell, as long as they can. The business generated “cash flow” and now they want someone to pay the price for those future “cash flows”.
So this is a demographic as well as a financial issue. We have discussed “What does it take to sustain your lifestyle,” and we have outlined what assets, including the family business, you have to work on to make sustainable lifestyles happen. So to be clear, a buyer will not want to pay anything more than they have to. You may have a value you need, but that is not important to a buyer.
We have to map out a strategic plan, so our goals are met on our terms, and not dictated to us by life’s unpredictable events such as market conditions and health. We need to look at who we want to sell our business to and who are the buyers that may wish to buy it. And we need to stage our business to look like what they want to buy.
Many businesses going through a transition typically end up going through 1 of 5 silos.
They transition to:
• Family Members
• Key Employees
• Strategics
• Financials
• Or go through a Liquidation
Have you identified your ideal buyer yet?
How It Works
It's time to face the truth. If you don't plan your exit correctly, you could end up working until you die. Your journey to a successful sale and increasing the value of your business by 30-50% starts with taking our Exit Valuation Survey. This tells us exactly where you are now, the exact performance of your business, and what you need to do to improve. You can access your buyer Risk Report and speak to our analyst team on a complimentary call to discuss your results, increasing value and exit options.
TAKE THE SURVEY
Discover how your business scores in
the 7 key drivers of valuation
ACCESS RESULTS & ANALYST
Understand the risks a buyer sees
when valuing your specific business
INCREASE BUSINESS VALUE
Implement the "7 Pillars Of Value Creation" and increase your business value
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*The Lower Middle Market is comprised of businesses worth $5-$30 million, typically having EBITDA of $1 million - $4 million.
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