When you have decided that this is the right time to sell your business, one of the first questions that crosses your mind is this:

Is it really worthwhile to target potential buyers?

Potential buyers can be companies, investment funds or even individuals. Depending on your strategy and motivation, you may be confronted with advantages and disadvantages that make you prefer a certain targeting approach to succeed in your transmission.

Understand your options as a transferor

To begin with, when your company is on the market to be sold, on average 25 buyers are interested in your company. At the end of the selection process, you enter into negotiations with only one party.

Between these two key moments, there are a multitude of possible options. It turns out that after many years of experience: there is an ideal approach that provides an optimal balance between costs and benefits to complete a sale. In order to achieve this, it is important to make the right decisions from the beginning of the transaction. This will help you to achieve the best result. To do so, you need to carefully and objectively evaluate the context of your business, its opportunities and the potential buyers.

Sell for the highest price, as quickly as possible while maintaining confidentiality

First, while there are many influencing factors, there are three key priorities for sellers that consistently influence the targeting approach. As a seller, you are certainly looking to maximize the value of your business in the shortest possible timeframe and in a confidential manner.

Keeping in mind the following three priorities: value, speed and confidentiality, you may intuitively conclude that the best thing would be to have a list containing targeted buyers.

You may even be about to negotiate an agreement with a potential buyer and why not consider exclusive talks with this unique buyer, who, at first sight, could successfully meet your three priorities. Here, it is recommended to take time to think!

Although a list of targeted potential buyers is an option to be considered and examined in depth in order to better prepare the sale of your business, it has turned out that it will not necessarily meet your expectations: a faster, more confidential and less stressful process. Indeed, it may not result in a sale under the best conditions.

Similarly, many conclude that a sales process that allows you to contact a large number of buyers may be the surest way to increase your chances of creating a competitive play. But sometimes that wide range of buyers doesn’t make sense. It could undermine your other objectives by, for example, putting sensitive business information in the hands of your competitors.

What you need to do to ensure these three priorities is to prepare a proper targeting that takes into account your entire context and your professional and personal goals.

4 fundamental questions to ask yourself in order to properly target your target buyers

1- Are there a small number of buyers who would be reasonably interested and who have the financial means to pay a fair price for your company?

In some situations, it is clear that there are only a handful of acquirers who will derive great synergies from the acquisition. Often, this handful includes key competitors. If these players also have the financial ability to pay a fair price, broader targeting may not add additional value to your sales process.

Among all the buyers around you, there are only a few who can capture the synergies and value creation that they can derive from the acquisition of your company.
Most of the time, these are key competitors. If these same buyers have the financial capacity to pay the price that best reflects the growth potential and value of your company, a very broad process is not necessarily useful.

2- Does your company require specific sectoral or technical knowledge in order to preserve its durability after a possible acquisition?

In some cases, there is a long list of potential buyers, but we know that a buyer needs specific industry knowledge to feel comfortable with due diligence and ultimately close the deal. This is often the case if your industry is a market with rapidly changing regulatory requirements, and as such, we will likely only focus on buyers who have experience in your market

If your industry does not fall into this category and is accessible even to those who are not industry specialists, it usually means that there is a longer list of candidates to take over your business. Therefore, broader targeting may be your best route to ensuring you find the best buyer.

3- Are you sure that, among the short list of buyers, there will be several candidates who will make interesting offers?

If you are not confident, you should seriously consider a wider targeting. Sometimes the buyers who are supposed to be the most interested and offensive do not behave in the way you would expect.
In fact, sometimes they don’t even make an offer at all.
Buyers’ investment decisions are influenced by many factors – those related to the business or even those that in some cases are unrelated.

They may be preoccupied with another acquisition or an important project and simply do not have the time to focus on the business you have presented to them. It is essential to follow your buyers closely to ensure that the bidding process runs smoothly. Approaching only five buyers and receiving only one offer is far from ideal for creating competitive tension.

4- Is it harmful for your company to share confidential information with several actors?

If sharing confidential information would be detrimental to your business, you should target it more narrowly. As a general rule, you should address a small number of buyers and limit the disclosure of this information to the parties concerned as much as possible in order to preserve your business.

What is the best way to target the transfer of your business?

Here is a small chart that illustrates the impact of targeting on the points developed above according to needs to help you choose what is best for you:

In summary, what you need to correctly determine your approach is a rigorous analysis of your potential buyers, experience with buyer habits in other transaction situations, and additional market information. It is important to thoroughly research and analyze your potential buyers. To do this, a business transfer expert will save you time, optimize your approach and give you the best chance to conclude a deal that meets or exceeds all your objectives.