While a business owner may think their business would be attractive to everyone, this can only occur when you position the company to be so. Depending upon the culture and the structure of the business, not all buyers are the same. The business owner should determine early on who the best buyer of the business might be and groom the business accordingly. Small closely-held businesses are typically attractive to people who are in the same business market or work for the business that is for sale and could succeed the current owners as the new owners of the business, but one needs to be careful not to limit themselves to those two buyers. These buyers are more than often undercapitalized and may not be able to pay a price you are expecting thus setting a price at what you can get compared to what you want.
The key to any successful transition event is aligning the company with the most likely candidates necessary to close a successful transaction. Understanding who those buyers are is paramount in a successful event. Whether these buyers include financial, strategic, competitors, management, or employees, the key is to groom the business to the buyer most likely to acquire your business.
Just like the old saying “you start dying the day you were born”, you should start the transitioning process the day you start your business. While you may not know who specifically the buyer of your business may be, knowing whom the best candidate may be will guide your planning for growing, grooming and capturing the value of your business. This planning process requires setting the goals and objectives for your vision on what you want your business to be, which correspondingly, those same goals and objectives require the same business drivers a buyer will consider in determining if and how much they would pay for the purchase of your business.
If you have been in business for some time, the best time to begin the planning for a transition is several years before any anticipated transition date and if that is not known – now. The reason for such timing is to allow for any changes to gain traction and to put the business in its best light; the changes should be substantial and value-adding, not just purely window-dressing.
So ask yourself, who is your likely buyer and better yet is your business prepared for the time you are ready to attract that buyer?