Corporate Finance, Deal Advisory
How to find a buyer for your business
In the UK, SMEs are the backbone of the economy – they make up 99% of the private sector and generate just over half of the sector’s total revenue. Plucky entrepreneurs from all walks of life drive innovation, create jobs, and boost growth.
But what happens when these individuals decide to sell their business, perhaps so they can retire or try something new?
Selling a business is rarely simple. From understanding the real value of your business to navigating the intricacies of marketing, negotiations, and legal formalities, the process can be challenging.
Our corporate finance team has worked with hundreds of startup and SME owners over the years, helping them form and complete an exit plan. We’ve found that one sticking point many owners have is finding a suitable buyer for their business.
Perhaps you’re in a similar position. You’re weighing up the idea of selling your business, but you’re not sure how to find a buyer. Well, in this guide we’ll explain the steps involved with identifying a buyer, with an actionable process you can follow. By the end, you’ll be equipped with the knowledge and tools needed to find the ideal buyer and seal the deal.
At the outset, you want to identify which types of business might be interested.
This is a crucial step. When acting for a client that wants to sell their business, we put together a diverse, but targeted range of “buyer categories” to increase the chances of finding a buyer that aligns with our client’s objectives.
One category could be direct competitors. Another might be private equity firms looking to boost their portfolio. Thinking further afield, there are acquisition entrepreneurs or industry startups. Another category could be businesses in a similar industry that want to expand into yours (e.g. a men’s fashion business buying a women’s clothing brand). Or there are businesses that might want to cater to a wider audience (e.g. a mid-level brand buying a luxury brand, or a business based in the North-East that wants to expand into the North-West).
Identify suitable companies
Now that you’ve identified categories of potential buyers, you need to look for companies within those categories.
This can be a manual process of working through each category and proactively searching for good fits. Here are some things you can consider when looking into potential buyers:
- Size – Are they big enough? Any buyer needs to be big enough to fund an acquisition but not so big that the acquisition would not be worth their time.
- Acquisition History – Do they have any experience with acquiring other businesses? If yes, how often do they acquire other businesses? Have they made any comparable acquisitions, and how much did they pay?
- Funding – How might the buyer pay? Businesses backed by private equity or venture capital are more likely to have the support and funding required for an acquisition.
- Synergies – How would they benefit from an acquisition? Common synergies include access to geographies where the buyer has less exposure, complimentary customer bases, expansion of products/services, IP, cost-savings, and economies of scale.
You can ease the administrative burden of searching for a buyer by listing your business on online marketplaces. There are several platforms available in the UK, but although this option is simple enough for small, micro-businesses, it’s often not a suitable option for bigger operations.
Work with an adviser
Alternatively, you can work with specialist financial and business advisers, like us. As a multi-department firm of chartered accountants and advisers, we can provide support through every stage of the sale process, not just sourcing a buyer, including valuation, negotiation, due diligence, tax structuring, and more.
Finding a buyer for your SME is a multifaceted endeavour that requires a meticulous approach. To recap the key points from this article:
- Targeted approach: Classifying potential buyers into categories allows a systematic and strategic outreach process. Whether it’s competitors, private equity firms, or businesses in related industries, knowing who to target can speed up the acquisition process.
- Leverage expertise: While some businesses may find success using online marketplaces, others, especially those on the larger end of the SME spectrum, will benefit from the nuanced expertise of corporate finance advisers. Their networks, experience, and industry-specific knowledge can streamline the process.
Selling your business is a journey. Every business owner seeks not just a buyer, but the right buyer – one who recognises the true value and understands the company’s potential. By following the steps outlined in this guide, you’ll be better poised to navigate the challenges of the journey and find a buyer that’s a perfect match.
If you need help with finding a buyer, our team can help. We’ve helped hundreds of businesses, big and small, find buyers and complete a sale. Learn more about our corporate finance services here or get in touch for a free consultation.