It is obvious that the most important question for those selling a business has to do with where and how to find buyers.
You need to offer your business for sale in a manner that doesn't tip off customers, partners or employees. Also, you probably do not want to let competitors know that you are selling - unless there's a specific competitor as a prospective buyer.
If you already know a person or business that may be interested to buy, you will proceed with a confidential inquiry. To address a more wide arena of potential buyers, a safe approach is to use brokers or blind ads on business-for-sale marketplaces to get the word out.
Sales of businesses benefit from competition among buyers, as is the case with anything bought and sold. If a bidding situation develops, the selling price almost always goes higher or the terms improve. Given that, it is interesting to look at how businesses are typically marketed and sold.
Small businesses (sales less than $2 million) are typically sold by business brokers. To make a living, brokers typically handle 7 to 10 listings at once and don’t have the time to do much, if any, custom marketing. Their marketing efforts are usually limited to running ads on the business-for-sale websites.
These ads are relatively simple. Selling a small business is like selling a nice but standard automobile, like a 2010 Ford Explorer. You don’t really need to describe much about the business because most people know what a Ford Explorer is, so, typically, you’ll have a one-page summary. A restaurant, print shop or gas station is pretty easily understood, so you would want to describe the location, size, financial performance and include some photos.
These ads typically appear on sites such as exitadviser.com, bizbuysell.com, bizquest.com, and businessesforsale.com, to name a few. This method is effective since buyers know to search there. Marketing only on the business-for-sale platforms makes sense for many small business owners, since these sites are geared to individual buyers who make up the majority of small business buyers.
Also, you may want to learn how to fine tune your ads on business-for-sale marketplaces (by Inc.com).
If a small business is a Ford Explorer, a mid-sized company (sales $2 to $100 million) is more like a rare, antique automobile, like a 1948 Ferrari Barchetta. A buyer of a rare car is going to want to know a lot of detail about the body, electrical system, engine, maintenance history, and the like. Similarly, a middle market company needs a complete "book" that describes all aspects of the company, target market, competition, history, product line, reason for sale and other information.
Related: How to Prepare a Sales Memorandum
The market for mid-sized businesses gets larger as the company gets bigger. Some individuals can still buy, but, more often, other companies and private equity groups will be your target market. They will most likely not be local but can come from virtually anywhere in the country, perhaps internationally too. The problem is that many companies are not actively looking to acquire a new business, though many will jump to buy when the right opportunity presents itself. Thus, the key to getting the most attractive bids for middle-market businesses is by marketing the company to a large number of individual buyers, potential corporate suitors and private equity groups. The key is to not primarily use industry contacts or business-for-sale web listings, but to integrate good, oldfashioned marketing techniques like mailings and telephone calls, as well as the traditional print and web ads. Middle-market businesses are typically sold by M&A firms. To get the greatest number of bids, and attract the highest price, look for a firm that focuses on marketing.
Large companies (greater than $100 million in revenue) are like a cargo ship. There are not that many buyers that would be interested, so you would hire a specialized broker who knows the industry and can approach the buyers he has in his database. A large marketing campaign is not needed. For large businesses, typically an investment banker is hired who has industry specific knowledge that can be used to find buyers and structure an appropriate deal.
For example, if the owners of NOKIA (a well-known Finnish mobile phone maker, now owned by Microsoft) really wanted to sell, there are a limited number of companies that would be interested, and a good investment bank working in that industry would probably know all of them. The goal, of course, is still to get multiple bids.