Anything Sale of a business is unique and the sales process is customized to each business. There are many benefits to preparing for the sales process well in advance when you start considering a change of ownership in your business.

Here, John Nygaard, a business broker at Business Broker, provides insight into what a structured sales process entails. Business Broker advised more than 200 companies in the sales process.

What is a structured sales process for businesses?

The structured sales process is the part of our consultancy where we seek out potential buyers, obtain multiple indicative offers and negotiate with multiple buyers at the same time. It is a form of competitive bidding.

"When several companies bid, we have the opportunity to negotiate the best terms. Everything is fully confidential, but the potential buyers need to know that they are in competition with others," says John Nygaard.

As M&A advisors, Business Broker is Business Broker involved in all phases and guides the owners safely through the process. As a customer of Business Broker , you Business Broker assigned two dedicated advisors who will work closely together until the ownership transfer of your company is complete. Read also 5 reasons to use a business broker

The structured sales process can be broken down into 5 points

1. Prioritization of buyer candidates

Together with you, we identify a broad field of relevant buyer candidates.

We typically work in buyer segments - the obvious buyers are often the larger Danish or international competitors, but it can also be upstream or downstream in the value chain (customers or suppliers) who may have a strategic interest in expanding their current value chain.

In addition, we analyze adjacent industries where there may sometimes be companies looking to buy into complementary business areas. Last but not least, we identify the private equity funds and investment companies that may be interested.

Based on the broad analysis, Business Broker a targeted prioritization of potential buyers.

2. Buyer dialog

The next step is systematic telephone contact with the buyer candidates in order of priority. We refer to you as a company anonymously so that the news of an impending change of ownership does not spread. If there is interest, a confidentiality agreement is signed and the company presentation is shared.

At this stage, there is typically a lot of dialogue between the potential buyer and Business Broker order to clarify whether there is strategic interest, so that they can become a good and attractive buyer.

3. indicative bids

If we assess that a buyer is serious enough, they are often invited to a physical management presentation where the buyer and seller meet each other. It's very much about chemistry, but also about putting more words to the company.

If there is still mutual interest after the meeting, we ask the potential buyer to make an indicative offer.

4. Negotiation process begins

We then work with you to select the best possible buyers and begin the negotiation process. Only then will the final framework conditions be established.

5. Letter of intent (LOI)

When there is only one buyer candidate left, a letter of intent (LOI) is signed with terms for the transaction, price, payment model and other conditions. The buyer then obtains exclusive rights for a period of time.

Now the structured sales process is complete, and due diligence begins, and the buyer gains access to all aspects of the company.

Information is released as interest increases

We take confidentiality very seriously and ensure that interested buyers only get just enough information to pique their interest. More and more information is released the further the interested buyer wants to go.

See the figure below, which illustrates how we narrow the buyer field as we provide insight into company information.

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