Only 1 in 7 owners who go to market actually consummate a transaction. We have personally seen multiple cases where owners took their businesses to market only to find out that there were no willing buyers out there. Why is that?
There are a multitude of reasons. Let’s look at a recent example:
Before going to market, this company was grossing more than $10 million in revenue and was growing 15% to 20% annually. They were very profitable and had multiple offices in at least 3 states. They had great market share and a reputation for superior products and services. On paper, they looked terrific. They hired an investment banker who was certain he could find a buyer for the company.
They went to market by sending out information to more than 300 potential buyers. They received several indications of interest, but when those parties took a closer look at the business, they passed on it. A big surprise to everyone involved! How could this happen?
The owners were not growing their business with their exit in mind. They had never researched who the likely buyers were and what they were actually buying in their industry. If they did, they would have realized that their product/service mix needed to change in order to attract a buyer who would take the whole business.
The owners took the business off the market after 6 months of effort and after spending tens of thousands of dollars in advisory fees. They retooled the company for the next 2 years and went to market again. This time they were successful!
Luckily, they had a second chance to go to market while their industry was still in consolidation mode and while the economy was still strong.
Some owners are not that lucky. If you fail at selling to an outsider the first time, you may not get a second chance to take your company to market. Buyers may no longer be interested in you or your industry or an economic downturn may make selling difficult – as many would-be sellers are experiencing right now!
So many owners like you are dependent on the proceeds from the sale of their businesses to fund their retirement and are now faced with the fact that they have to rebuild and increase business value before they can exit and gain their freedom.
Owners who plan in advance will have a much better chance of selling when their profits return. And those who have to or prefer to sell to key employees or family members have a number of options that may could actually be more appealing than an outside sale. Join us to find out how.
It can take years to prepare yourself and your business for an ownership transfer. Don’t wait until a buyer comes knocking or a key employee walks out the door.
