What’s Worse Than No Buyers? Just One!

Finding buyers for an existing business can be a frustrating and time consuming process. Communicating that your business is for sale to the largest audience possible is the only way to maximize value; yet openly advertising it can be disastrous. The possible ramifications of concerned employees, customers, competitors and vendors can dramatically affect morale, hurt sales, increase direct competition and upset key relationships.

As with any kind of marketing, you need to understand the target market. Business sellers are no different: they need to identify the potential buyers of their company in order to effectively promote it.

Competitors, suppliers and customers

This comprises the largest group of potential buyers. Although there are risks associated with divulging proprietary information to them and word getting out that you are looking to sell, this group can represent an attractive prospect list. Most often, this group understands the intricacies of the industry and can relate to the opportunities and threats that exist today.

Competitors and suppliers, in particular, often have duplicate processes and functions that can be eliminated, adding additional benefit during the transition to new ownership. A recent merger saw the purchaser implementing many human-resources procedures of the newly purchased company into his existing company. In this case, the buyer was able to save on duplication of departments and add additional savings. The additional added value to the buyer helps improve marketability to the seller, making these prospects very attractive.

Read: Selling Your Business 101 to prepare for the eventual dissolution of your company.

Strategic acquirers

Not to be confused with competitors, strategic acquirers are buyers who may be interested in the synergies created when integrating another company into their existing company. For example, a similar business operating in a different market may be interested in expanding into a new regional market, or it may be interested in a business's distribution channels, technology or products, which would strengthen its existing infrastructure or product offering.