June 9, 2020
Is There A Buyer For My Business?
By Jeremy Albelda
In good economic times (like the good old days just a couple of months ago) or in a period of uncertainty like today, the first question that business owners ask us is, “Do you have a buyer for my business?” The simple answer is a resounding, yes! Certainly, this will depend on the quality of the business as to who and how many buyers might be interested. The next question that inevitably follows is, “So who is it?”
When business owners are approached by an intermediary, they often believe that they are being targeted by a specific buyer. This is not normally the case. The majority of potential investors do not have a specific target in mind but have a broader mandate. Although we do have requests for buy-side engagements targeting specific companies, this is a smaller segment of the lower market M&A world.
That brings me to the next statement a seller often makes, “If you don’t have a specific buyer for my company, then I am not interested.” We can understand that sentiment. They don’t want to waste their time unless there is someone specifically interested in buying their company. However, if you would be interested in selling your company, if a specific buyer approached you, then how much more should you be interested if there were multiple potential buyers? As with any deal, having multiple buyers creates flexibility and diversification. Sometimes there is even a bidding war (cha-ching!). By talking to an advisor, you can get the information needed to understand the entire process.
Buyers can fall into many categories. They can be a local competitor looking to secure more local market share for their business through an acquisition, or an out-of-town company looking to expand into a certain geographic area. It could be an ex-corporate executive, maybe a high-net-worth individual, or a family office that is seeking a new investment opportunity. There are also private equity groups and international sovereign funds looking to add to their portfolio. Suffice to say, there are more buyers than sellers.
With liquidity being abundant and everyone looking for the next deal, we try to obtain multiple offers for your company, not just one. Even more so in today’s business climate with historically low-interest rates, plenty of capital and little taxation, everyone is searching for a return on investment. An existing company with earnings is a safer investment than many other types of opportunities.
The “professional” business buyers have general investment criteria that focus on certain industries and sectors. They also have specific earnings thresholds. Some look at only controlling ownership interests while others might look for a minority stake. Because of their mandate to deploy their capital, they are in a constant search for businesses to buy. This need for “deal flow” can be an opportunity for the business owner.
Let us assist you in finding the best buyer for your business by matching you with a pool of potential buyers, not just one. Although it may be flattering to have a buyer specifically seeking you out, if you go through the entire M&A process, you are in a better position to explore all deal options and not leave any money on the table, even with that one potential buyer.
For example, in the DC metro area, we have over 400 pre-qualified individual buyers on file and even more in our other regions of Florida, Pennsylvania, New Jersey, New York, Connecticut, as well as internationally. Our proprietary CRM Database contains 550,000 investor contracts, many of them pre-qualified with cash position and net worth, and ready to make a move for the next deal.
About A Neumann & Associates, LLC
A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or firstname.lastname@example.org