HOME | MORE KNOWLEDGE | How we find buyer candidates
How we find buyer candidates for your business
Finding the right buyer for your business requires networking, thorough research, solid experience in business development, andhuman insight. In short, professionalism across a range of parameters. Here, Michael Vadgaard Jørgensen, Business Broker, provides insight into how the process of identifying serious buyer candidates often unfolds.
"The process of identifyingrelevant buyer candidates beginswith a preliminary list. The seller's and Business Brokers suggestions for buyers are noted first. We then continue our research to find other serious buyer candidates to add to the list," explains Michael Vadgaard Jørgensen.
Serious candidates can often be found among Business Brokers network of companies, in databases, or among Danish and foreign investment companies. Michael Vadgaard Jørgensen points out that the research phase is conducted with a wide angle to ensure that all relevant buyer candidates are included in the gross list and are assessed on the basis of, among other things, financialandcommercial criteria. In parallel with the research, Business Broker prepares Business Broker presentation of the seller's company, which provides factual information about the company, from its finances and concept to market developments.
Selecting buyer candidates for your business
"After thorough research, we present the gross list to the seller. Together, we qualify the list and prioritize the buyer candidates. Candidates who sell complementary products and can therefore achieve synergy by buying the seller's company are given high priority. These are usually candidates that the seller has not been aware of before our research," says Michael Vadgaard Jørgensen.
Based on the prioritized list, Business Broker the top management of the selected companies and discusses the strategic opportunities for growth through acquisitions and the current company in an anonymized form. This dialogue reveals whether they are interested and relevant buyer candidates in the further sales process.
"The contact is done in complete discretion. If the candidate is interested and we continue to believe it is a good match, we will ask for a signed confidentiality agreement before sending the description of the seller's company".
According to Michael Vadgaard Jørgensen, the number of potential buyers varies from industry to industry, but typically Business Broker runs Business Broker parallel process with a number of potential candidates at this stage.
The right buyer is about more than just price
Sellers of medium-sized owner-managed companies often want the company to continue operating based on the same values and standards as before. Business Broker uses this knowledge when narrowing down the field of potential buyers based on financial and commercial interests.
"It's often important to business owners that the spirit of the company lives on under the new ownership. Therefore, together with the seller, we assess not only key figures and financial gains, but also the personal chemistry and the buyer's way of doing business," points out Michael Vadgaard Jørgensen.
The prospective buyers who confirm their interest after reviewing the company presentation are invited to a meeting. Initially, this is often with the advisors from Business Broker then with the seller, if both parties are still interested. To get an indication of how serious the buyer candidate is, Business Broker asks Business Broker a preliminary bid on how they see the company in terms of price in the event of a transaction.
Final negotiations and earn-out
"The price indicates how serious the individual candidate is," says Michael Vadgaard Jørgensen and explains that the field often narrows down to two or three candidates.
When the prospective buyer and seller meet, the advisors from Business Broker have Business Broker important role to play, he explains:
"As the seller's advisors, it is our job to ensure that the meeting stays focused. Among other things, we make sure that the buyer outlines what they want to do with the seller's business, how they run their own business, and ask about their business concept andattitudes, so that the seller has abasis for making a decision. This is particularly relevant in transactions with partial seller financing or earn-out.
After this phase, the right buyer is usually identified and final negotiations can begin.
Full discretion throughout the sales process
If you ask Michael Vadgaard Jørgensen what questions the seller is concerned with when finding buyer candidates for the company, he says:
"Confidentiality is always an issue. Sellers are often nervous that information about a sale will leak out to employees, suppliers and customers before final agreements have been made. But the seller can rest assured - we are very discreet and only provide information to serious candidates with a signed non-disclosure agreement."
