Would you know if your perfect buyer came calling? [Case Study]

when a buyer comes knocking

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In the majority of SME business sales it is the vendor who decides to sell, advertises and looks for a buyer. Occasionally, it is the buyer who metaphorically comes knocking on your door offering to buy your company.

In reality, the buyer won’t just be knocking on the door to your office. They’re busy running their growing business and planning to expand so it is more likely that they will have engaged the services of a Buy Side Broker who will be conducting a search of the market for them.

And how does that Buy Side Broker know you are considering a sale? The short answer is that they don’t. So it will either be a speculative approach to many, if not hundreds, of businesses, or they will utilise their business network. Make this a part of your checklist.

The importance of a good business sales network to introduce your perfect buyer

Just like many industries, Buy Side Brokers and Sell Side Brokers often network. It can be directly with business brokers like Uscita or it can be with other professionals such as accountants, IFA wealth managers, solicitors, clients and just via good professional networking groups.

There are also many online sales portals who release details of acquisitive buyers. It is the role of a business broker to be across as may of these platforms as are reasonably possible for the geographical or niche sector they operate in.

The acquisition profile is an essential first step

With this particular case study it all started from a regular mailing by Langcliffe International who operate as Buy Side Brokers. Uscita has had a working relationship with them for many years through Business Partnership and it was just one of their regular mailings which attracted attention.

That is perhaps a little unfair. The acquisition profile created by Langcliffe was so well written it confirmed from the outset that their clients were motivated buyers keen to expand an existing UK niche into a sector which was also quite specific – street furniture – that’s benches and bins amongst a lot of other things.

You need to employ a lookout to watch the market for your perfect buyer

As a business owner, you could subscribe to these mailing lists yourself, but your inbox is probably overwhelmed already and 99% of them won’t reflect your business. So this is where it is sensible to engage the services of a business broker, or at least start a conversation to see where it leads.

There will be many acquisition profiles which go unanswered simply because a broker doesn’t know of a matching business looking to sell or at least open to the idea of it.

Always accept an invitation to catch up with your business broker

We had known Ian from Bailey Street Furniture Group for a number of years, having done some acquisition work for him in the past. Because of that we knew his business well enough to connect the dots to the acquisition profile. That didn’t mean he was ready to sell up, so the first conversation was simply to find out. We explained what we knew of the acquisitive buyer, CRoWD, and were able to confirm with Ian that if the deal was right, he would indeed consider selling the business.

Ian Bailey tells it like this;

Having worked with Paul on an acquisition project some years ago, when he approached me saying he had a buyer looking to buy my business, I figured it was worth meeting. My business was exactly what CRoWD was looking for.

Paul’s initial concern however was about my goals for a sale – price, legacy, time. Having a clear idea of my destination helped later in the sale, retaining my focus on what was important to me, when the inevitable challenges of the deal arose.

Due diligence still has to be detailed and complete

Just because we, as brokers, could see a great match between acquirer and acquiree, doesn’t mean there wasn’t a lot of work still to be done. But what we had established was that the two companies had a strong commercial fit that made sense and would drive future growth in the UK for CRoWD.

All the usual due diligence checks and examinations still had to be done and what began turned out to be a 12 month process complicated by cross border due diligence and legal issues, a group re-organisation, share options, tax planning and improved trading (which required an upwards adjustment to price later in the deal).

Ian comments again;

There is also real value in having Paul’s experience. He guided me through the challenges of an intense process. You will receive advice from many different parties and having someone to work through this with me, someone clearly on my side who understood my goals, helped me retain my sanity as we waded through the meetings, negotiations, legal advice, tax advice and due diligence.

The importance of a strong commercial fit

Frequent and open communication was the key to keeping the acquisition moving in the right direction at all times. Either side could have easily given up at any one of the hurdles that appeared had it not been for the foundations set early on. That is to say that a strong commercial fit had been identified which underpinned the fundamentals of all aspects of the deal.

Stronger together

The opportunities of the union between CRoWD and Baileys Street Furniture Group are significant and we will watch with interest as it blossoms.

Get on your broker’s radar

Business brokers like Uscita are driven to get the best deal possible for a client, whether acting on the buy side or sell side. At Uscita the best deal for your business sale starts long before it comes to market and taking the time to prepare your business is one of the factors which will increase your chances that a buyer will come calling, and the deal successfully pushing through.

Start your conversation with us now by completing a benchmark Value Builder Score.

Case Study selling your business street furniture

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