Many businessmen sell their company to the first person who gives them an offer. Big mistake.
If you have spent many years building a business, looking after every detail, and creating value, don’t just sell to the first person willing to buy from you. Plan the sale and look for the ideal buyer.
Of course, finding the ideal buyer requires a lot of effort- it involves using a strong search methodology and combing the market for all possibilities. However, in the end, it will be worthwhile because the difference in price will be substantial.
So how do you start looking?
As M&A specialists, to determine who the best candidates are, we use four common tools: the SWOT analysis, the Boston Boxes, the “Experience Curves”, or the Porter analysis.
The best buyer for our company is not the one that´s most evident or closer to us. The best counterparty could be, for example, a company in another sector, akin to yours, and located on the other side of the World.
Within the competitive environment, companies feel forced to having their eyes, at all times, placed on the adjacent sectors and in new products and services that come from sectors or markets that were not competitors in the past.
Usually, acquisitions are a tool that buyers use to reinforce strengths or solve weaknesses when facing the competition. A well-executed acquisition is a fast way to strengthen capabilities (creating a competitive distance) or to offset the company´s limitations.
Given that you know your sector so well, you might be inclined to think that no one better than you can know your company’s ideal buyer. It’s even possible that a company has shown interest in buying your company. But how can you be sure that there aren’t other companies who can make better offers if you don’t research?
Seek a buyer with considerable liquidity for whom your company offers these synergies, without regard to where they´re located. If this potential buyer perceives real value, they will pay more money for your company.