Tuesday, 23 August 2011
Real Stories of Two Recent Buyers
Attracting buyers for a business is no easy task. Wide open promotions that a business is for sale can be disastrous, but the only way to find a buyer is to communicate that a business is for sale.
As with any purchase or sale there are numerous different types of buyers. Recently, I have been seeing more and more of the following two types who are looking at Southwestern Ontario as an area of long-term opportunity.
First, there is Dave, I would classify him as a strategic acquirer. Not to be confused with competitors, Dave is interested in synergies that might be created by purchasing another company. For example, his business is regional; a similar business operating in a different area such as Essex County is of interest in order to expand into a new market. Plus, there may be other areas of interest, such as a business’s distribution channels, technology, service mix, etc., which, in Dave’s view would strengthen his current company’s infrastructure and product & service offerings.
The second, named Steve, he’s an investor. Investors represent a growing pool of potential buyers, and Steve fits the bill exactly. Because of the recent volatility and poor performance of the stock market, Steve has realized that as a business owner, the return on his investments can be significantly greater when successfully operating a company of his own. Scott is currently looking at Southwestern Ontario’s housing market as a low cost opportunity to cash in on the home equity gains seen in his present residential market. Thus giving him access to the capital necessary to buy a business while maintain a lifestyle he and his family are accustomed to.
Seller’s must not fall into the trap of focusing all their efforts on a single prospect or target market, no matter how attractive. Creating and managing competition helps maximize the price buyers will pay for a business.
A big reason sellers turn to a professional business broker when deciding to sell is to open up markets of potential buyers across the province, the country, as well as throughout North America. Brokers enable sellers to access a broader pool of prospects, so the Dave’s and Scott’s of the world can be targeted in their marketing efforts.
Do you have small business questions you would like answered about this article or others? Please visit www.VRWindsor.com or call 519-903-7807.
William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.