Advice needed: Offer to purchase my business and contacting other interested parties.

[Robert Down]

Hello all, I have an online business that I have run for 20+ years, it is prominent in the industry sector. Over that time others in the same space have expressed their interest in acquiring it if I should ever decide to sell. Now an attractive offer has come in that I am considering.

Obviously I want to get the most for it.

What would be the best way to proceed in this situation. I have not sold a business before so have no experience of getting the best price.

I do not need to keep the fact an offer has been made secret, however I will not be disclosing who they are or the details of the offer.

Any pointers much appreciated.

 

[Clinton]

The first thing you should do is run away!

While it's always flattering getting an offer, it's often the case that

a) the offer isn't a binding offer in writing. This means that they can give you any figure now and then chip away at that price later once they start digging into your records and operation. And they will almost 100% certainly do that.

Offers of this sort are meaningless as they invariably become an offer of a completely different number later ... and usually after the competitor has extracted a lot of useful information.

b) you, the business owner, are nowhere near qualified to deal with this. There are a million things you can do wrong and you will be best off being represented by someone who knows what they are doing and who can provide you the right guidance and fight your corner.

There are numerous games buyers, investors and others in the M&A game play. And even the smartest, most clued up business owners - people who've built and run businesses with great success - make the dumbest mistakes in business disposal situations and lose tons of money as a result.

My advice - do not meet with them till you've spoken with at least a few business advisers and appointed one to act for you. The size (turnover / profit) of your business will determine the type of adviser you should go for - all the way from corporate finance firms to M&A boutiques to investment banks.

Obviously I want to get the most for it.

You will not get the most for it unless you have multiple buyers on the scene. And it needs to be the right type of buyers! But you cannot get several highly qualified (and liquid) buyers unless you run a proper marketing campaign to get the opportunity out there in a carefully and closely managed project using the right expertise.

That costs time and money. Larger businesses (£5 million and over) tend to be smart enough to appreciate this and they make that investment in professional advisers to handle the sale.

 

[STDFR33]

Unless they have seen full accounts and asked a thousand and one questions, they cannot have possibly made you a serious offer.
Take the offer with a massive pinch of salt.

 

[Robert Down]

Thanks for the advice guys, I do believe the offer to be genuine, I know them and they know me, I also know they have had their eye on my business for a long time. Their offer is more about clearing away competition than taking on a new business.

My question is more about how to approach other interested parties to see if I can secure a better offer. Thanks for any advice.

 

[STDFR33]

How serious are you about selling?

If you are not that serious, you are going to be handing over sensitive information on the running of your business to your competitors.

Roughly how much is the deal expected to be worth?

 

[Clinton]

<sigh> "Genuine" has nothing to do with it!

As I said, the best way to approach other parties is to get someone who knows what they're doing to represent you. It'll take money up front. Do it on the cheap and it'll probably turn out to be one of the most expensive mistakes you've ever made. I've seen it time after time after time.

I'll repeat @STDFR33 's question about the size of the deal, but just to get it in perspective it might help if you gave us the turnover / profit of the business as well. The size makes a difference with respect how best to go about this.

 

[BTON Agency]

My question is more about how to approach other interested parties to see if I can secure a better offer. Thanks for any advice.

Hi Robert, as always certain people on here just chest puffing without really knowing your business, just wanting to look important.

I am sure you are well enough placed to decide yourself if the offer is genuine for the comments you have posted above.

Answering the question you have posted. If you do have other parties that have been interested in the past why not contact them and give them a deadline to make you an offer.

If you are really interested in selling and the offer that has come in is not fully grabbing your attention why not start to plan an exit strategy. Try and reduce costs over the next 6 months, put even more effort into increasing turnover and profit then look to place with a broker who you trust and is understanding to your needs (not just a gob on a stick).

I deal more in residential property than businesses but we do negotiate some sizable deals and its all about getting our clients the best price. Feel free to PM me if you want, i am not in a position to help you commercially but if you want to bounce some ideas will not give you a hard time.

 

[STDFR33]

Hi Robert, as always certain people on here just chest puffing without really knowing your business, just wanting to look important.

I am sure you are well enough placed to decide yourself if the offer is genuine for the comments you have posted above.

Answering the question you have posted. If you do have other parties that have been interested in the past why not contact them and give them a deadline to make you an offer.

If you are really interested in selling and the offer that has come in is not fully grabbing your attention why not start to plan an exit strategy. Try and reduce costs over the next 6 months, put even more effort into increasing turnover and profit then look to place with a broker who you trust and is understanding to your needs (not just a gob on a stick).

I deal more in residential property than businesses but we do negotiate some sizable deals and its all about getting our clients the best price. Feel free to PM me if you want, i am not in a position to help you commercially but if you want to bounce some ideas will not give you a hard time.

I'm not sure that insulting other members is necessary.

I'll repeat this for intellectually challenged, it cannot be a serious offer if they have done zero due diligence. It just a meaningless figure to try and get your attention.

 

[GraemeL]

Hi Robert, as always certain people on here just chest puffing without really knowing your business, just wanting to look important.

Whats that supposed to be about? Have you a chip or something?

 

[STDFR33]

Whats that supposed to be about? Have you a chip or something?

His bum is still hurting from when it was pointed out several times how stupid he was. He has yet to learn from the experience.

 

[BTON Agency]

I'll repeat this for intellectually challenged, it cannot be a serious offer if they have done zero due diligence. It just a meaningless figure to try and get your attention.

Was that the advice he was looking for? No he wanted to know how to get more offers.

Why not try and help people with the questions they ask.

 

[STDFR33]

Was that the advice he was looking for? No he wanted to know how to get more offers.

Why not try and help people with the questions they ask.

It’s an open forum, I can respond in a way that I see hit. Incidentally, my comments are relevant.

 

[Newchodge]

Why not try and help people with the questions they ask.

Because, often, people ask one question, but actually need answers to others as well, in order to deal with their issue. And, being an open forum, others with similar issues will read the threads and may get useful information.

 

[Clinton]

Answering the question you have posted. If you do have other parties that have been interested in the past why not contact them and give them a deadline to make you an offer.

This is one of the most ignorant suggestions I've heard in a long time.

For a party to make a credible offer they need to first have access to the books and access to a lot of other information. For an online business they may require SEO data, access to analytics information (or raw server logs), information on the subscriber database and how/when it was cleaned, stats on the affiliate network, PPC data (including negative keywords etc) ... or other commercially sensitive information.

You are suggesting the OP pulls his pants down and shows everything to everyone in an attempt to attract other offers?

That's the most insane way of destroying value in your business and giving your competitive advantages away to exactly the wrong people!

 

[BTON Agency]

Because, often, people ask one question, but actually need answers to others as well, in order to deal with their issue. And, being an open forum, others with similar issues will read the threads and may get useful information.

And that is fine, some people just seem to revel in highlighting issues.

 

[STDFR33]

And that is fine, some people just seem to revel in highlighting issues.

Any pointers much appreciated.

Others seem to relish in whinging, it would seem.

 

[Robert Down]

Blimey I didn't expect this question to turn into a willy waggling bun fight! How unprofessional is that?

Here's a few of the comments so far "run away, nowhere near qualified to deal with this, massive pinch of salt, just a meaningless figure, have you a chip or something, bum is still hurting, ignorant suggestions, whinging" what kind of helpful friendly advice is all that?

How very disappointing. If you can't offer advice without tearing into each other please don't bother and allow other people who can control themselves to comment.

 

[Clinton]

"run away, nowhere near qualified to deal with this, massive pinch of salt, just a meaningless figure"

Robert, if you're not smart enough to recognise all of the above as good advice, and think it's "willy waggling", then I'm out. Good luck.

 

[STDFR33]

How very disappointing. If you can't offer advice without tearing into each other please don't bother and allow other people who can control themselves to comment.

People attempted to, up until the point they were rudely interrupted by uninvited insults from @BTON Agency.

@Clinton is an expert in buying and selling businesses. The advice you have received, and would have received, is invaluable. Though I appreciate it might not be the advice you would like to hear.

 

[Chris Ashdown]

From the little I know, the information within your company could be a fantastic amount of data for some other company who may or may not have a real interest in buying you out

Common sense means you can only make a bid for a company if you know the true facts or at least can understand the company house records and also have a understanding of the position of the company within its industry

They may be able to make a guess at what they think its worth to them and suggest that as a opening bid but sooner or latter will want to delve into the company affairs in a deep and inquisitive manner to see if their assumptions were correct

This would mean basically giving away data that can easily be used buy others if the deal does not go through

I think what Clinton is saying is that whilst you are probably a good MD of your company, you may well be out of your depth in dealing with the tricks of selling the company and that depending on say the value of the company expert help would be advised. Obviously a company price in a few thousands takes a different set of skills to one with a Million turnover

I would suggest a private PM with |Clinton could be beneficial if he is still interested

 

[The Byre]

Buying and selling companies can (and usually do) involve one in the most Machiavellian games of poker you can imagine.

The original question was, how to get other companies interested?

Here are some of the usual tactics and in the order in which I have seen them being used -

1. The village gossip. Every village has some idiot, who, if you tell them something in the strictest confidence, will blab it across the village pub and beyond. Here, you get someone else to talk to a trade journalist in the very strictest confidence that they had heard that your company was an acquisition target for company X. He/she should do this in passing "Oh and by-the-way, what's all this I hear about . . . " That gets the word out.

2. Planting the seed. You need someone 'friendly' in a big company (think billions, not millions) to approach the key person in your target company X, just looking for information about your company. These conversations are best done at trade fairs BTW, possibly over a beer and very informally. He says nothing, but just asks our target for his/her opinion of your operation and profitability in particular. (As you are in the travel business, someone inside TUI would be ideal!)

3. The bogus survey. Pay someone £100 a day to perform an industry survey. They will believe that they are working to get 20 vital questions answered for a genuine industry survey. You tell them that this survey is being performed on behalf of some large company in your sector. What they are really doing, is telling everybody and anybody that some giant outsider, such as an American PE company with a record of M&As in your industry, is looking closely at your sector and may use your company as a stepping stone to urinate on all their strawberries.

4. Blab. Find a gullible trade journalist or business correspondent that fancies themselves as an investigative reporter and tell them outright "Hey, this story is going to break soon anyway, whether I like it or not, so I thought I'll give you the first bite! A bidding war for my company seems to have broken out and I thought that you ought to be the first to hear about it!" Your journalist will do a phone-round and of course, get nowhere, except that now we have yet another noise off-stage and all about your company.

5. Your own rival bid. By now, your target will want to talk to you again. It seems that TUI, Virgin Travel, DFDS and the cat's mother-in-law are after your company and you imply that you have a very good rival offer. You tell them nothing about this rival offer, but it is at this point (if not sooner) that you get 'adult supervision' and talk to someone like @Clinton, who one assumes, will assemble a team of advisers. They may even have someone who can organise some of the noises off-stage described above and do so in a way to tie in with their preferred strategy.

Good luck anyway (and above all, don't fall in love with any offers, or make any future plans, until the cheques have cleared!)

 

[GraemeL]

I would weigh any advice received by doing a little research on the persons who were giving it. Most posters to this thread have a profile page that can be freely viewed. One poster does not provide any information.

 

[Clinton]

@Clinton is an expert in buying and selling businesses.

I would suggest a private PM with |Clinton could be beneficial if he is still interested

talk to someone like @Clinton

Thanks for the mention, everybody.

I've come across it all before, too many times. Person who owns business gets offer, gets flattered ...gets screwed. There's something about the human psyche that screams, "If I'm smart enough to build a business worth £x, then I'm smart enough to sell it myself."

There is a huge disparity in knowledge between buyers and sellers, and buyers take full advantage of that. Amazingly, sellers with no experience selling a business often don't realise just how much they don't know so they willingly walk into (or leap into) the minefield with their eyes tightly shut ie. do it without professional advice.

And you can't get the highest price for your business if it's your first ever sale! In fact, the chances are you'll get screwed in one way or another (if not on price, then on deferred payments, buyout terms, other sale terms, deal structure, warranties and indemnities ... or simply by giving competitive information away for nothing).

There's a saying that when a man with money meets a man with experience what usually happens is that the man with experience walks away with money and the man with money walks away with experience.

@Robert Down has done a runner because he didn't want to hear what we've been telling him. He probably expected everyone to respond with a "Wow, you must have done really well with your business for people to be making you offers! What a smart chap you are." He didn't like the dose of reality.

Once again, thanks for suggesting he speak with me but the OP is looking for @BTON Agency kind of back patting / ego stroking bullsh*t. That's why I opted out of providing him further advice on optimising his sale price.

 

[Robert Down]

Assuming I have "done a runner" eh! I think you would have been better opting out of responding entirely. I know your type and have done very well by avoiding people with your condescending, belittling attitude.

You do yourself no favors, certainly not on a professional level unless your intention is to come across as a bullying bighead, who in their right mind would want that type of person on board. You may very well have your fan boys on here but I can assure you it does not wash with me. Just another keyboard warrior out touting for business. I have no doubt you will still want the last word, it's in your nature, so go ahead and let everybody see what you are.

 

[The Byre]

You do yourself no favors, certainly not on a professional level unless your intention is to come across as a bullying bighead, who in their right mind would want that type of person on board. You may very well have your fan boys on here but I can assure you it does not wash with me. Just another keyboard warrior out touting for business. I have no doubt you will still want the last word, it's in your nature, so go ahead and let everybody see what you are.

Looks like, with a friendly attitude like that, you're on your own, son!

I sold a business and I didn't have one Clinton, I had two, plus outside advice from friends in the business who knew the other party. I also had two teams of lawyers.

 

[Mr D]

Robert, ignore experience by all means. It's not the people on here who will regret what you do.

Some things pop up again and again on here and other business forums. Look for the end result.

 

[Mark T Jones]

Assuming I have "done a runner" eh! I think you would have been better opting out of responding entirely. I know your type and have done very well by avoiding people with your condescending, belittling attitude.

You do yourself no favors, certainly not on a professional level unless your intention is to come across as a bullying bighead, who in their right mind would want that type of person on board. You may very well have your fan boys on here but I can assure you it does not wash with me. Just another keyboard warrior out touting for business. I have no doubt you will still want the last word, it's in your nature, so go ahead and let everybody see what you are.

Problem is @Robert Down at any time there are about 5 threads running on this forum from people who come looking for advice, give vague evasive answers to questions then get bolshy when they are told things they don’t like

Whether you are a fan of Clinton’s delivery or not, the fact is that he is exceptionally experienced and doesn’t ever solicit business on here.

Personally, for my money, he is the one I’d listen to.

 

[STDFR33]

Assuming I have "done a runner" eh! I think you would have been better opting out of responding entirely. I know your type and have done very well by avoiding people with your condescending, belittling attitude.

You do yourself no favors, certainly not on a professional level unless your intention is to come across as a bullying bighead, who in their right mind would want that type of person on board. You may very well have your fan boys on here but I can assure you it does not wash with me. Just another keyboard warrior out touting for business. I have no doubt you will still want the last word, it's in your nature, so go ahead and let everybody see what you are.

LYou sound like that the person that requires, uncompromised, professional advice, specific to your situation ... that of course, is paid for.

 

[Clinton]

Just another keyboard warrior out touting for business.

I hear you, but the problem is I'm completely crap at this touting for business stuff. I start off by telling prospective business sellers that they've no idea what they are doing and, often, that their business is not worth an iota of what they think it's worth.

As a sales tactic that doesn't seem to be working very well! What am I doing wrong?

Maybe I should join a marketing course somewhere.

Have a nice life, Robert me ol' mucker.

 

[serendipitybusiness]

Haha the only posts I have seen from Clinton is telling people that their businesses are too small to be of interest to him in a professional sense and then offering free advice. I agree, if he is touting, he is doing a terrible job!! His advice is very valid.

Be careful when dealing with competitors, even if you know them and they seem genuine. They may be just after your business data and it is a tricky situation. You can't buy a business without due diligence and if you allow your competitor to do due diligence then you have to show them under the hood. This is very valuable information. Approaching others opens this up to all of your competitors.

Trust the advice, I learned the hard way, after they turned me over they, I found out that they then went on to try and do the same to my other competitors. The question is how can you sell to a competitor without exposing yourself to risk. I still don't know the solution to this but would be interested to find out. I guess the answer is seek a professional but if you are dealing with tire kickers then this could be costly to a small but health business.

 

[mhall]

For what it's worth :
I find Clinton arrogant, big headed and a know it all when it comes to buying and selling a business - just the sort of person you need to listen to.

I may disagree with his approach but sometimes you need to hear what you need to hear. Bear in mind that he could just cut and paste much of the advice he has given, but he doesn't - proof surely that he does want to actually help.

Now, whether you want to take his advice is another matter. You could just take some money and run.

 

[Mr D]

Yes, people may disagree with Clinton - always worth researching what people tell you on a forum - some people tend to be right.
I don't think anyone would suggest slavishly following advice gained on an internet forum. Using it as a basis to research the facts, the options, the methods available - hell yes.
The things I have researched that Clinton has mentioned on other threads have always proven correct so I tend to trust his judgement. However I'm not someone else, they can make their own decision based on their own research.

 

[Clinton]

Thanks for all the comments, everybody.

Haha the only posts I have seen from Clinton is telling people that their businesses are too small to be of interest to him in a professional sense...

It's not just about size. It's also often the case that I'm fully booked up and can't take on any more clients, but I'm usually happy to provide some quick advice here in UKBF.

The question is how can you sell to a competitor without exposing yourself to risk. I still don't know the solution to this but would be interested to find out.

Start a thread and I'll give you some strategy tips on how to sell to a competitor without having to bend over and let them take advantage of you. But start a new thread, this one has pretty much run its course.

 

[serendipitybusiness]

Great, that would be very helpful to all, thank you. I have started a new thread here.