Understand Real Buyers from the Posers
- Understand Real Buyers from the Posers
- Steps to Take When You Receive an Unsolicited Offers to Buy your Business
- Why was I sent an email to buy my business?
- Who is sending these emails to buy my company?
- What to do if you consider selling your business?
- Offer to Buy Your Business Conclusion:
Steps to Take When You Receive an Unsolicited Offers to Buy your Business
As a business owner, you wear many hats. Your roles often include overseeing production, operations, and sales. You may even be working to establish a partnership, settle ownership disputes, or bring in a third party.
Your role as a business owner may also include considering potential offers to buy your business. However, some offers may be unsolicited and come to you via email.
As a business owner or CFO, you are probably used to receiving multiple emails a week from companies or individuals asking you to consider selling your business or whether you have an exit strategy in place.
Before you assume these emails are spam, it may be worth considering the merits and legitimacy of these offers.
Why was I sent an email to buy my business?
Chances are that your company information was found in an online database by a company looking to acquire a business to invest in or partner with. These partnerships, part of a buy-and-build strategy, often enable an existing business to grow into a larger, more valuable enterprise.
Since some of these emails may be legitimate inquiries while others may be fraudulent, it is important that you decipher which kind of organization may be sending you emails. Knowing this will enable you to decide better if you are to respond and, if so, when.
Who is sending these emails to buy my company?
There are various types of individuals that might be reaching out to you about your business. It is important that you understand the difference between these types of individuals and their motivations in contacting you.
More likely than not, these offers are coming from four types of individuals or organizations, which include:
- Strategic buyers and competitors: Companies like these are often operating within your same industry and may be looking to grow in some sort of metric. This growth may involve expanding product or service offerings, hiring more employees, or acquiring additional facilities. They may even be interested in eliminating competition altogether.
As a result, these sorts of companies may want to purchase your business to streamline their efforts in growing. Their initial outreach to you may come from a corporate team partner or by an investment banker they might have hired to help them facilitate an acquisition.
- Financial buyers: These types of buyers — which often include venture capital firms and investment banks — are interested in purchasing a business, growing its value, and selling it for a profit. They often acquire various small businesses to create a larger company that will deliver greater returns.
These firms often hire investment bankers who market a roll-up of their businesses to various buyers. This enables them to consider multiple opportunities and pursue those businesses that best meet their needs and goals.
- Family offices: If a high net-worth individual or family approaches you with interest in acquiring your business, it often means that they see your business as a long-term investment opportunity.
- Investment bankers/brokers: Bankers and brokers can represent both buyers and sellers. If these sorts of individuals reach out to you about your business, it is likely because one of their clients is interested in acquiring a business like yours.
They may also be reaching out to you to discuss your exit strategy and see if there is any interest on your end to put your company on the market. Doing so might streamline the process of you finding a potential buyer.
There is also a proper way to turn down an offer to buy your business as you may not be ready now, but want to solicit potential buyers in the future.
What to do if you consider selling your business?
Many business owners may decide that selling their business is the right course of action. There are a few considerations to make and steps to take before moving forward with a sale, however.
First, commit to entering the sale process with an accurate picture of what the market is willing to pay and where your asking price fits into that.
Also, read what is value in a business valuation.
One way to do this is to consult professional business appraisers, like those at Business Appraisal FL|GA (BA F|G), to accurately assess your business’ value and potential sale price using numerous business valuation methods. Doing so will ensure that you solicit objectivity and fairness when assessing the value of your enterprise, which will eliminate any sentiment that would have otherwise influenced the selling price.
As a business owner, you will definitely want to gather the financial records of your business for the past few years to prepare for an upcoming valuation. These records include an income statement, a cash flow statement, and a balance sheet.
An accountant can help you to transform the income statement into a seller’s discretionary earnings (SDE) statement, which will reflect the profit earned before tax and business owner benefits. Together, this with the business appraisal will offer insight into the true value of your business, which you will need to effectively obtain your business’ potential selling price.
Do not forget the tax liability. A tax minimization analysis will help you with deal structure and knowing your net after-tax proceeds.
Offer to Buy Your Business Conclusion:
Many individuals and organizations may approach you as a business owner to pique your interest in a potential sale.
Selling a business is an important step that you may decide to take for your company. Determining a fair and accurate selling price for the enterprise is vital to the sale process. Know your company’s value before you go to market.
Reach out to BA F|G today to discuss your situation and set yourself up to confidently engage with potential buyers for your business.
As a business owner, do you need help with your business valuation steps? Please call or contact BA F|G.
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