As both a Massaxhusetts business broker and a business attorney, I sometimes find myself in an awkward position when in a room filled with other business brokers.  As the telling of war stories progresses, it is only a matter of time until somebody loudly exclaims, “the attorney killed my deal!” [This being the “G” rated version.]  I usually just bite my lip when I hear this in conversation.  

In my experience, an attorney (or for that matter an accountant) never recommends that a deal be terminated for no reason.  In most cases, the deal had been structured in a way that was disadvantageous to the client from a business or tax perspective.  This happens most often when a client fails to involve his professional advisors during the planning stages of a transaction (sometimes at the urging of a broker trying to emotionally commit the principal before involving his professional advisors). 

Whether you are buying or selling a business, your best chance of structuring an advantageous deal is during the planning stages.  So involve your professional advisors at the earliest possible stage. Ignore contrary advice, even when it seems to come from credible sources.

Ascend Business Brokers, Massachusetts business brokers, assists owners in selling their businesses.

This is the third and final part of the Strategic Marketing Plans series. Part 1 of the series discussed the need to identify the types of potential buyers for a business, while Part 2 addressed the specific methods used to target and attract buyers.  This article focuses on the importance of "timing" in relation to the Strategic Marketing Plan for the sale of a business.

As stated earlier in this series, the way to obtain the highest price upon selling your business is to attract the greatest number of potential buyers. Common sense suggests one further thing, that the potential buyers for a business should be targeted simultaneously, whenever possible.  Negotiating with two or three (or more) buyers is better than negotiating with just one.  This is nothing more than the law of supply and demand as it applies to the sale of a business.

This concept is so simple that is often overlooked, particularly when businesses are marketed for sale by their owners.  It is one’s natural tendency to negotiate with a buyer (usually the first to show interest) at the expense of actively continuing the search for additional prospects.  This is because searching for buyers takes time and effort. Nevertheless, failing to continue the search for buyers is a grave mistake when it comes to achieving the highest price for selling your business, because attracting the greatest number of potential buyers at once increases the likelihood of obtaining the highest price upon selling a business.

For these reasons, timing is extremely important. After having identified the types of potential buyers for a business and the best methods to attract them, all of these methods must be aggressively pursued across multiple marketing channels, simultaneously.

The ultimate goal is to bring the most buyers possible to the negotiating table, at the same time. When this goal is accomplished, a business owner has the best likelihood of obtaining the highest price for his business.  This is true regardless of whether one is selling a restaurant, which has been our example in this series, or any other business.

Ascend Business Brokers, Massachusetts business brokers, assists owners in selling their businesses.

Part 1 of the series Strategic Marketing Plans discussed the need to identify the types and categories of potential buyers for a business. Part 2 of this series discusses the methods used to target and attract specific types of buyers, once they have been identified.

Let's continue using the example of selling a restaurant from Part 1. Potential buyers identified for the restaurant might include the following:

1. Chefs of Restaurants
2. Employee-managers and Employees of Restaurants
3. Current Restaurant Owners
4. Regional Chain Owners
5. National Chain Owners
6. Investors

An essential element of the Strategic Marketing Plan involves devising methods to target and attract the greatest number of buyers from each category. Online advertising with the most prominent business listing websites and print advertising generally will reach all types of buyers, provided that they are actively searching for a restaurant. Moreover, based upon our experience, online advertising is most likely to attract buyers from only the first three categories.

In many cases, Current Restaurant Owners, Regional Chain Owners, National Chain Owners and Investors are not aware that they are potential buyers for a restaurant. Only after they are contacted and informed of the opportunity do they transform into potential buyers for a restaurant.  These buyers must be individually targeted by telephone, e-mail and/or old-fashioned, direct mail advertising campaigns.

Contacting potential buyers by telephone, e-mail and direct mail is not always straightforward. Both the Employee-manager and the Owner of one restaurant might constitute potential buyers for another restaurant. However, while the Employee-manager of a restaurant might be reached by telephone to discuss the opportunity, the Owner might be reached only by direct mail or e-mail. This is why marketing across “multiple channels” is the essential.

Contacting the so-called "decision-makers" for Regional Chain Owners, National Chain Owners and Investors can be very difficult. These folks are well known for guarding their contact information and, in many cases, only will discuss potential acquisitions with trusted business associates.

Common sense suggests that the way to obtain the highest sale price for your business is to attract the greatest number of potential buyers. An experienced business broker or intermediary will devise a Strategic Marketing Plan in order to target and attract the greatest number of buyers for a restaurant - or any other type of business.

As discussed, a sound Strategic Marketing Plan should involve multiple channels. Obviously, the broker must have on hand (or have the means to acquire) an ample database of potential buyers for a business, and possess (or quickly develop) relationships with the "decision-makers" for institutional and corporate buyers within the industry.

Experience counts when selling a business. For you to achieve the best price upon the sale for your business, your broker’s marketing plan must involve more than adverting your business online and waiting (praying?) for buyers to call.

Part 3 of this series will discuss the importance of "timing" in relation to the Strategic marketing Plan.

Ascend Business Brokers, Massachusetts business brokers, assists owners in selling their businesses.