Dec 24, 2021
4 Places To Find Qualified Buyers For Your Business
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Curious about how to find potential buyers for your business? Or perhaps wondering where you can find business buyers?
Fortunately for entrepreneurs seeking to sell their business, the current market conditions heavily favor business acquisitions. Recent industry reports suggest that for every single business listed for sale, there are about 15 prospective buyers on the market. They range from individuals to strategic buyers, to private equity groups.
As it turns out, however, the growing number of potential buyers doesn’t necessarily mean that the sale of your business is going to be easy. 90% of interested parties who actively search for listed businesses don’t follow through on the sale process. Consequently, only 20% of the listed businesses end up selling successfully.
These 20% of businesses are the few businesses that manage, among other things, to connect with qualified buyers. Instead of waiting around for potential buyers to discover them, the business owners take the initiative to link up with the right buyers.
You too can borrow a page from their book by leveraging the same methods they use to find the best buyers. An easy way to do it is to work with our Transaction Advisors at Beacon. We’ll hand-hold you through your sale process, and you can get started with a complimentary valuation. If you want to take a more manual approach, here are four options that are also viable paths to sell your main street small business:
How Do I Find a Buyer for My Business? Here Are 4 Options With High Profitability
#1. Online Business Listing Marketplaces
Find Business Buyers In Online Marketplaces. Source: Pixabay
On the web, you’re bound to find several platforms that act as digital marketplaces for buying and selling businesses. These websites are exceedingly popular with business buyers, as they regularly publish listings of profitable businesses for sale - across a wide range of industry categories, locations, and EBITDA levels.
The whole system operates more or less like any other digital marketplace or real estate property site. That means that sellers get to advertise their businesses to hordes of potential buyers, hoping to ultimately convert any interested parties.
In return, you can expect the online business listing sites to earn a commission from the sale of your business. This fee rate usually depends on your business valuation, asking price, and the size of the business.
It’s worth noting, however, that while such listing sites offer a wide market reach, you’ll be facing very stiff competition from other sellers.
Pros and Cons of Online Business Marketplaces
Their wide reach allows you to freely market your business to any type of buyer.
Online listing sites are trusted by both business buyers and sellers as credible platforms for buying and selling businesses.
They are affordable and easily accessible.
They are versatile enough to host a vast range of business categories.
Due to the disproportionately large number of sellers, the level of competition here is exceedingly high.
The most reputable marketplaces come with very restrictive terms. Your business can only be listed if it meets certain quality standards.
The all-inclusive approach means the sale process is never personalized for individual buyers and sellers.
Marketplaces will charge you a commission for the sale of your business.
#2. Business Brokers
Business Brokers. Source: Pixabay
Business brokers offer a more specialized system of connecting business owners with the right buyers. What’s more, they closely administrate the sale process to secure the best terms and prices for the parties involved.
For the best possible outcome, you might want to work with a seasoned business broker who has already built a vast network of market connections. They should have a rich database of prospective buyers who’d be interested in acquiring your business.
Pros and Cons of Business Brokers
They conduct a business valuation to confirm your overall profitability, as well as establish the best asking price.
You get access to a vast database of potential buyers.
Prospective buyers are reviewed to identify the few qualified buyers with the right resources and skills to sustain a successful business.
Business brokers act as an intermediary between business owners and buyers. This keeps the negotiations cordial enough to quickly close the deal on good terms.
Your business broker will help you convert the most qualified buyers. They know how to package the business deal well enough to compel interested parties to commit.
They help entrepreneurs cut through the red tape and all the minutiae that come with a business sale transaction.
While they’re widely considered to be middlemen, a business broker tends to favor the interests of the party they represent. The ones that are hired by buyers, for instance, tend to prioritize the buyer’s concerns over the seller’s interests.
Since business brokerage is an unregulated field, finding a reliable company can be a challenge.
#3. M&A Advisors
M&A Advisors. Source: Pixabay
Closely related to brokers are M&A advisors, who also happen to act as intermediaries. The principal difference between the two is, brokers deal with standard business sale transactions while M&A advisors provide guidance during mergers and acquisitions.
The latter is slightly more complicated than the former, as the buyers are ordinarily enterprises seeking to take over your business and then integrate it into their operations. That means you’ll be selling your business to a large corporation, government organization, or possibly a firm that manages multiple subsidiaries and partnerships.
That said, it’s worth noting that the costs involved are considerably higher than in conventional transactions. Your M&A advisor can, for example, help you sell a profitable business for tens of millions of dollars or even more.
Such prices are no problem for U.S. corporations, as non-financial entities alone are currently holding on to cash reserves worth $4 trillion - which is largely meant for investments and business expansion projects like mergers and acquisitions.
The role of M&A advisors here is to grant you access to this exclusive group of business buyers, as well as facilitate the subsequent sale process. They can market your business to their networks of strategic buyers, help you identify the most qualified buyers, and then negotiate the sale of the business on your behalf.
Pros and Cons of M&A Advisors
They reach out to high-profile business buyers like corporations and government organizations.
They negotiate the sale of the business on your behalf.
They manage the complex terms of engagement that come with acquisitions and mergers.
Your M&A advisor will perform a business valuation to determine the ideal asking price.
M&A advisors target just one type of buyer. You can only sell your business to large corporations seeking profitable mergers and acquisitions.
The business buyers here are very selective in terms of the businesses they’re willing to purchase.
The terms and engagement policies are way more complicated than in standard business sale transactions.
#4. Investment Bankers
Investment Bankers. Source: Pixabay
An investment banker is another solid option to consider if you’re wondering how to find a buyer for your business.
This is a professional who is essentially tasked with raising capital for organizations, governments, corporations, agencies, and other entities. As such, they enjoy very close relationships with both strategic and financial buyers.
You could, for instance, use an investment banker to reach out to a private equity group, or maybe an expanding franchise. Whatever type of corporate buyers you have in mind, your investment banker will guide you through the whole process of finding potential buyers, contacting interested parties, identifying qualified buyers, and engaging them throughout the sale process.
Investment bankers are also known to provide business valuation services as a means of safeguarding the value of your business. Then during the sales process, they proceed to negotiate the transaction agreement - as the final measure to protect your interests when closing the deal.
Pros of Cons of Investment Bankers
They can link you up with both strategic buyers and financial buyers.
They protect the value of your business through valuation and sales negotiations.
They manage the entire sales process on behalf of their clients.
They assess the market in detail to identify the best opportunities for selling businesses.
Investment bankers charge a commission for their services.
They specifically focus on firms and organizations - not individuals.
(Bonus) #5. Hybrid Model: Use Beacon
Beacon is a tech-enabled business broker. We give you the best of both worlds: the relationships and hand-holding of a business broker, and the tech-savviness of working the appropriate online advertising, listings websites, and communities to find you qualified buyers.
We typically begin the sales process with a comprehensive, complimentary business valuation, through which we review over 150 different data points - cash flow, profitability, EBITDA, etc.
Your potential buyers, on the other hand, are adequately pre-screened to confirm their entrepreneurship skills and resources. This ensures that the party you transact with has what it takes to not only purchase the business, but also run it effectively over the long haul.
Once everything checks out, we proceed to the third and final stage - where we help business owners sail through the due diligence stage and, ultimately, close the sale deal. Beacon will even see to it that a confidentiality agreement is signed, after which you can proceed with your business exit plan.
Over To You
As a business seller, you might want to keep in mind that this is just the first step in the long business sale process. Once you manage to find business buyers, you still have to worry about the intricacies of calculating the value of your business, screening qualified buyers, formulating an exit plan, negotiating the sale terms, and doing post-sale follow-ups.
These are not the type of tasks that you can comfortably juggle. Many have tried it, and an overwhelming majority of them have failed miserably. Even if you somehow manage to start off on a good rapport with prospective buyers, there’s more than a 50% chance that the deal might eventually fall apart during the due diligence stage.
To avoid the risks, consider taking advantage of our specialized business brokerage services. Beacon won’t just find you people looking to buy businesses - we’ll even prequalify your prospective buyers and manage the entire sale process, leaving you to focus on your core business operations.
Get started today with a complimentary valuation.
Explore your options
Get a 100% confidential and complimentary business valuation.
Davis Porter is an extensively published business author who, for over a decade now, has deeply specialized in B2B commerce, finance, digital marketing, and business tech. While he was always intrigued by the intricacies of entrepreneurship, it is his Business Management degree that ultimately sparked his burning fascination for examining and resolving incessant challenges in business/finance.
Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.