Exit Preparation 9. The right buyer - where are they hiding?

Personally, I would recommend against trying to sell your business yourself. There are so many factors that have a significant bearing on how the process goes and what the outcome might be that it really is a job for experts. There are exceptions to this which are very few and far between, but they do exist.

Consider the situation where a competitor or someone in a closely related business sector wants to acquire you for the purpose of increasing market share or reach into a market they don’t yet have. In that situation, they might be a sufficiently “motivated buyer” that you will agree instantly on a price that works for you and for them. In that case, the lawyers and accountants are probably all you need to proceed.

But I still strongly advocate using a reputable Broker. Now, let me be very clear that I don’t get involved in selling businesses. My role is to prepare them for sale. I don’t understand the intricacies of the Business Broker and their functions other than in the broadest sense and to be honest, I don’t want or need to. It is a specialist role that is complementary but separate to mine.

For many New Zealand SME owners, finding the right buyer for their business is a critical step in the process of exiting. It’s not just about selling; it’s about ensuring the legacy of the business, the continuity of service for its customers, and the welfare of its employees. The journey to locate a buyer who aligns with these values can be complex and requires a strategic approach.

This article explores various avenues and strategies NZ SME owners might employ to find the ideal buyer for their business. Even though I strongly recommend that you do use a broker in almost every scenario, it can only help if you’ve done the groundwork in advance because in the end, you know far more about your industry that they do.

Understanding the Market

The first step in finding the right buyer is understanding the market dynamics specific to your industry in New Zealand. This involves analysing trends, identifying potential growth areas, and understanding the types of investors interested in these sectors. Knowledge of the market not only helps in positioning the business attractively but also in identifying potential buyers who are actively seeking opportunities in your niche.

Professional Networks and Industry Contacts

Leveraging professional networks is a crucial strategy. Accountants, lawyers, and business advisors often have extensive networks and may know of individuals or companies looking to invest in businesses like yours. Additionally, industry contacts, such as suppliers, competitors, and even customers, can sometimes provide leads to potential buyers. Engaging with industry associations and participating in business forums can also expand your network and increase your chances of finding the right buyer.

Business Brokers

Hiring a business broker can significantly ease the process of finding a buyer. These professionals specialise in matching sellers with buyers and have access to a wide network of potential investors. They understand the intricacies of selling a business, including valuation, negotiation, and the legal aspects of the sale.

Moreover, they can market your business confidentially, preserving its value while reaching out to potential buyers. Keep in mind that there are superb examples of the species and there are shockers just like in any other field of practice. Some will treat your business with the care, attention and respect that your baby deserves and some will treat it like another carcass hanging in the shop window.

There are the big companies that have many Brokers on the books such as Link and ABC and there are more boutique companies such as Tabak and Exodus. You get to choose, but choose carefully and have in mind the qualities you look for in the character of someone you are happy to trust with your biggest asset.

Online Business Marketplaces

The digital age has given rise to online business marketplaces and platforms that connect sellers with potential buyers globally. Websites such as BizBuySell, BusinessesForSale.com, are always available to explore and Link Business NZ offer platforms where SME owners can list their business for sale. These platforms provide the advantage of reaching a wide audience, including international investors who may be interested in entering the New Zealand market.

Social Media and Digital Marketing

Social media and digital marketing are powerful tools that can aid in the search for the right buyer. Crafting a targeted digital marketing campaign can help raise awareness of the sale among potential investors. Platforms like LinkedIn can be particularly effective for reaching professionals and investors in the business community. However, it’s important to approach digital marketing with discretion to avoid unsettling customers or employees.

Industry Events and Conferences

Attending industry events, trade shows, and conferences is another avenue to explore. These events offer opportunities to network with peers, competitors, and potential buyers in a professional setting. Presenting at such events or engaging in panel discussions can also increase your visibility and attract interest from potential buyers who are impressed by your knowledge and passion for the business.

Direct Approach

Sometimes, the direct approach can be effective, especially if you have competitors or complementary businesses in mind that might benefit from acquiring your SME. Approaching these potential buyers directly allows for a personal touch and the opportunity to discuss the mutual benefits of the acquisition. However, this approach requires tact and discretion to ensure that you do not compromise the business’s standing should the sale not proceed.

Preparing for the Sale

Finding the right buyer is just one part of the equation. Preparing your business for sale is equally important to ensure that once potential buyers are interested, they are impressed by what they find. This preparation includes ensuring financial records are up to date and comprehensive, operational processes are documented, and the business is presented in the best possible light.

Considerations for Finding the Right Buyer

When looking for the right buyer, it’s essential to consider not just the financial offer but also the buyer's vision for the business, their values, and their plans for its future. The right buyer should align with the business’s ethos, have a plan for its growth, and, ideally, intend to preserve its legacy and take care of its employees.

Conclusion

Finding the right buyer for an SME in New Zealand is a multifaceted process that requires a deep understanding of the market, strategic networking, and the effective use of available resources. By exploring various avenues, from professional networks to online platforms, and by preparing the business for sale, SME owners can increase their chances of finding a buyer who not only offers a fair price but also shares their vision for the future of the business.

Ultimately, the goal is to ensure a smooth transition that honours the legacy of the SME, benefits its employees, and provides the owner with a sense of accomplishment and closure.

Just a reminder. If you are even considering selling your business, I encourage you to have a closer look at the RHQ SME Exit Preparation Programme. It’s six weeks of your life that could make a profound difference and remember, you can do it all without needing to take your attention away from either your business or your family and I will be on-hand to help with whatever you need. Click [here] for a summary of what the programme is about.