A Better Way to Construct a Deal
Today’s buyers and sellers of businesses are attracted to deals that are quick, uncomplicated, and economical. Business owners looking to sell can achieve those parameters and often come out further ahead by pursuing an off-market process or deal.
What’s an “off-market” deal?
Deals that are carried out between a ready buyer and a well-represented sellers that is positioned strongly in the market. In the M&A industry, off-market deals involve properties or portfolios that are not publicly known to be on the market. They’re not advertised. They are quiet, under-the-radar deals that allow the buyer and seller to work in an atmosphere of strict confidentiality — without the clamor and distraction of other players. These situations are called “off market.”
As a seller you may be wondering what the advantage is for you to enter a private off-market discussion.
3 Advantages of an Off-Market Deal
- Timing: Buyers usually have a window where they have access to cash or the backing of investors. A seller who can meet the time frame will have opportunities not open to sellers who are locked into a lengthy, cumbersome, and expensive process. To meet a buyer’s timeline, sellers must stay engaged. They must complete each of the steps required by the buyer. The buyer’s due diligence process is governed by rules or laws that also affect you.
- Money: Unless you are among the most desirable businesses for sale, there’s a high cost to going to market. Yes, if you’re a profitable, well-positioned business, you can potentially create a bidding war among buyers — what we call an auction. However, it takes time, money, and energy to get there. Also, there are many variables that canaffect the success of this strategy. On the other hand, if you are a well-run business with a good profit margin in a competitive niche, you’ll find it quicker and less expensive to enter into an off-market conversation with a qualified buyer who is looking for someone just like you.
- Access to the right buyers: It can be hard to convey to sellers that they are desirable only to a narrow group of buyers. Remember, there are other sellers trying to capture the attention of the ideal buyer of your business. You probably don’t know who those ideal buyers are. (We do.)
Best of all, the off-market process can be done out of sight of competitors, employees, vendors — and anyone else who might be curious or nervous about what’s going on.
In my practice I have regular conversations with owners who want to sell their businesses. Each owner is in a different situation. Maybe they’re getting a feel for selling. Maybe there’s a health or financial issue pressing on them.
If you are an owner who is ready to separate from your business, I can help you take the step toward your ideal future. We talk about which types of buyers are looking for a business like yours.
With our team’s guidance, the CEOs representing the buyer and seller will meet. They will see if there is mutual interest and chemistry. This is a crucial stage for a successful transaction.
Statistically, most deals in the M&A arena don’t make it to the finish line. It’s especially common if buyers and sellers don’t retain professional and experienced dealmakers. There’s no reason to go forth with such dismal odds.
Let me reiterate: chemistry, trust, and transparency are essential for the deal to move forward.
Good off-market deals can propel business owners into dealmakers. These types of deals set the stage for relationships that can put you into another business or accelerate your post-transaction wealth building.
If you are curious whether your business is well-suited to an off-market process, give me a call at 561-543-2323. We have buyers who are ready and interested, and we can probably get the ball rolling before the end of the year.