Who is willing to pay for an equity position in your business?
No matter how strong the fundamentals of your business are, it is always advisable to get a sense of what the market thinks as well as the value that the market attaches to your business and the industry sector that you play in. Most importantly though, it is particularly critical to obtain some insights about the segment of the market that would have an interest in your business and the sector that you play in and why.
Most family business owners in the lower mid market get to a point where they want to sell or dilute their equity position in their business for one reason or another, but do not know how to go about doing it. Some approach this assignment the same way they would sell their house or property, whilst others get their lawyers or accountants to try and sell their business. One year or 18 months later, and after seeing lots of potential suitors, most of these business owners are still no where close to closing deal, but worse, given the amount of time spent in the market “throwing mud at any wall” and hoping that something will stick somewhere, they have now “commoditised their” asset, and this makes it difficult to generate interest in the business.
Our counsel is as follows:-
- Speak to the right people early on, this will save you a lot. Selling a business is a specialised skill and you need to the right people. Equally, selling a lower mid market family business with own peculiarities, is a different kettle of fish.
- You need to target. That requires you to speak to people who understand the market, but more importantly, the strategic buyers or financial buyers who would be interested in your business and why.
- You need to test the market long before you go to market.
Should you be interested to test the market, please get in touch with us on firstname.lastname@example.org