This post lists proven ways to generate leads for your business sale. Each requires experience and most require quite a bit of work. Also, several of these may breach your confidentiality if they are done by you directly. One more reason to always use a knowledgeable business broker.
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Management of your Company. We suggest that at least once a year you talk about succession planning with key employees and family members. Over many years, you can determine who in your family and organization might have an interest in your business. It is then easier to start a conversation by saying, “Although it is still several years off, do you really have an interest…”. Take this conversation through to preliminary financing etc. before you move up the timetable.
Trusted Advisors. Sometimes your attorney or accountant will have a likely Buyer. Professional advisors are a good source for referring Buyers. Talk to that Buyer. Just recognize that if that person is not the final Buyer your attorney or accountant probably cannot perform the salesman’s role of an intermediary or broker. If they do, then you should worry about the time they have to do your accounting and legal work!
Internet Listings. Primarily www.BizBuySell.com , www.ibba.org , www.mergernetwork.com, and others. This is effective for generating leads if the financial summaries fit the recommended valuation rules of thumb and it is the best source for corporate managers and corporate sales people. You can also reach competitors who have set an automatic email for anything in their industry. With Internet listings you need to list a little information about the business to indicate scale and industry and really focus on the numbers in order to generate calls. The ratios must work in order for the phone to ring so this is an excellent reason not to overprice the business. If necessary, make aggressive adjustments in your cash flow and clearly point them out in your package in order to generate leads through this source.
Cold Calling and Direct Mail. If a competitor, private equity group, or other business is a likely Buyer, both cold calling and direct mail can generate responses. While the response rates are generally low, again it only takes one Buyer. You can greatly assist your broker by providing trade association lists and contact points to help them generate an inclusive list of prospects. Research to identify potential buyers is a very important and time consuming part of the work when this technique is appropriate.
Industry Magazines and Websites. Some industries have trade magazines and websites where ads are occasionally posted for business acquisitions and sales. Sometimes these can be effective.
Suppliers and Jobbers. In some industries, suppliers and other people who work regularly with many companies may know people interested in buying businesses. Obviously this does not work if maintaining confidentiality is important to you. This is pervasive among liquor stores.
Once you have some interest qualification of your prospects becomes key. Ah – the need for a future post.
Gregory R. Caruso, JD, CPA, CVA
Harvest Business Advisors