Questions

We would continue with fast growth but need to exit for personal reasons. Where would you go from here to find a buyer? Very grateful for any answers.

Naturally 1001 variables play into this that I'm blind to but here are some assumption laced thinking points:

You're profitable, upwards trending, business, in a very competitive vertical. Yes?

You guaranteed have a Buyer, unless:

1. Your asking price is outrageous. Not likely as we've closed strategic sales that were 12x revenues. It doesn't get much more aggressive than that.
2. There aren't enough strategic or institutional buyers. Nope. The buyer market is wide with creative outreach. We've rarely tapped let's say 20% of our pool before successfully securing multiple qualified offers. (And we hold a 100% close rate).
3. You're so big ($1B+) that only a few have an opportunity to buy you AND they don't like you or your brand. Unlikely?

More likely...

4. The outreach effort is nominal. Most brokers and M&A intermediaries boast a sub 40% closing ratio and far too many of them are "listing agents" -- whereby they list a property, announce it to a pool of buyers in their database and then "wait". We've seen deals that we normally turn around in 60-days with all-cash offers, take 18-months for "payment plan" deals closed by other firms. The results based on the experience and model employed is indeed apples to oranges.
5. How your business is presented (packaged) is not producing conversions. This too would then be a fault on your banker's side. We "spy on" the competition - it's business as usual on our end - and the typical prospectus and marketing collateral and followup materials are, well, embarassingly slim from, well, everybody.

I've never encountered a problem with "the market" (the strategic buyers) and we've sold very niche and distressed properties.

We have declined taking on deals where the asking price was a number picked out of la-la-land (in which case we offer complimentary guidance, feedback and let them pursue other avenues for closing the deal - which basically never happens at that asking price)... but that's a sensible discussion and likely one that was already had.

If your exit is sub-$100M, your asking price is reasonable (even if aggressive), your business is indeed strong on its metrics, growth and brand value -- then any lack of offers sits with your banker.

You're likely looking to play professional basketball but you brought in a kid from a high-school team. Skills mismatch. Upgrade your "player" and you'll move towards a win quite rapidly.


Answered 6 years ago

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