Sell your business to an external buyer
Selling your business to an external buyer or a third party is the most common way to realise the maximum value of your asset. Many Australian business acquisitions are made by buyers who have an existing commercial relationship with the vendor. For example, businesses will look at buying other members in the value chain to reduce costs and increase profit margins.
Other acquisitions are strategically focused, such as buying a business for its unique assets. Intellectual property, exclusive contracts, brand equity, licences, distribution rights are all intangible assets that make a business an attractive strategic buy.
Buyers who are looking for strategic acquisitions may be private owners, equity firms, and listed companies. Australian businesses are often sought after by companies in other countries including the US, China, Malaysia, Canada, Singapore.
If you’ve never sold a business before, it can be very hard to find the right buyer and get the right price. Sellers need to be very particular about how to solicit an offer to buy the business.
A word of advice: there are risks involved in selling your business (both obvious risks and hidden risks) whether to an international company or an Australian buyer.
An obvious risk – and potentially the most expensive one – is not getting the best price for your business. The harsh reality is that many business owners have a biased view of their own business and its worth. Business owners calculate the energy, effort and sacrifices they have put in to building the business, especially if they started it from scratch. They think about what the business means to them, and they can often overlook or downplay issues that are holding the business back. And that’s the problem that causes the value bias.
But buyers don’t look at where your business has come from or how it got here; they are only interested in how much wealth it can create for them in the future. The potential earnings and asset appreciation are what reflects the full value of the business’ worth to a buyer.
If you want to position your business to achieve the full value or even above value – of its worth, get an unbiased perspective from a business expert. By looking at the whole of your business objectively, an experienced business coach can view your business through a buyer’s lens. They can identify areas that are blind spots to the owner but would cause a buyer to have concerns about the value of the business. Common weak points that buyers use to assess a buy price include:
- Lapsed or unsecured client contracts
- Weak or at risk supply chains
- Employment contracts, structures, and entitlement liabilities
- Poor internal management reporting on core business activity
- Lack of verifiable profit and productivity measurement
- Undetected or ignored service delivery issues that could result in warranty or recall claims
Any one of these weak points can drive the price down and inhibit you from realising the full value of the sale of your business.
How Tenfold helps to sell your business to a buyer:
- Hygiene: preparing the business for sale-readiness and an external buyer’s review/due diligence;
- Assessing potential strategic buyers and identifying sale opportunities within the value chain;
- Deep research on potential buyers: previous acquisitions, purchase prices, appetite and strategies for growth;
- Discretely positioning your business as a desirable target to selected potential acquirers;
- Agitating to elicit an offer, leveraging market tension to maximise price;
- Assessing offers, guidance on which to decline vs consider;
- Maintaining the business as a desirable acquisition until the right offer is achieved.
The primary advantage of a selling to a third party is achieving the full value of the business. At Tenfold, we have successfully guided our clients to achieve sale prices of double-digit multiple of EBITDA.
The sale outcomes we have achieved for our clients have set up them up for financial independence and security. By increasing their wealth through the sale of their business, it has given them the freedom of choice to retire in comfort or pursue other ventures and interests. The wealth you earn from selling your business gives you unlimited options for how you enjoy your time: travelling, spending time with family, getting involved in your community, even building new businesses.
The right advice and planning makes all the difference. Speak with Tenfold today to explore how we can support you to sell your business successfully and profitably.
Call us: 03 9813 8777 . Alternatively, book a call back via the request form below.