Often when I am talking to business owners who are considering selling their businesses they ask me if I can find a buyer for them ‘off market’, ie without listing the business on external websites. I have found through experience that while this approach can work in specific situations it more often doesn’t and I am usually reluctant to do off market deals.
Sometimes we talk to buyers who are reluctant to pay an upfront cost. At GSE we do have a mdoest upfront cost which covers the cost of preparing a full market appraisal as well as publishing a marketing document called an ‘information memorandum’ that we provide to qualified buyers. An appraisal allows us to spend time taking a deep dive into the business and its financial performance to identify any issues that may come up in the sale process as well as highlighting areas for improvement. This is such a crucial step as it allows us to provide really valuable insights that you may not have considered as well as a qualified and honest opinion from an experienced broker on how much we can achieve for the business in its current state or what you can do if the current value doesn’t match your expectations. The IM provides buyers with a comprehensive snapshot of the business and how it performs and really does help to advance initial interest and sell them on an inspection.
We have worked really hard to keep our upfront cost to a minimum, our listing fee offers tangible value for money and our appraisal and IM documents are provided to you as a pdf report that you can keep and refer back to and they have real value and in fact we offer them as a standalone products that business owners can purchase. I often get business owners who approach me when negotiating directly with buyers and want to get an accurate appraisal so they can agree to a price.
By skipping this step we are probably going to be less knowledgeable about your businesses and feel less confident in defending a valuation.
We also sometimes come across business owners who want to take an off market approach because they want to test the market, ie they want to find a buyer and negotiate an offer without really making a commitment to selling, as a broker there is nothing more frustrating than taking on a listing, doing all of the work to sell the business and negotiate with buyers only for our client to refuse to accept a full price offer because they are not fully engaged or ready to sell. This will inevitably cause us reputational damage with the buyer and so it is important that we ask these questions and secure a commitment from our clients so that we can achieve a successful outcome.
I am generally much more accountable and committed to clients who have given me a commitment and appointed me to be their exclusive agent. I have generally spent a lot of time on their listing and feel a greater sense of responsibility for securing an outcome than I am with looser arrangements where, if I am completely honest, I have a tendency to sometimes forget about them when talking to buyers…
If you are looking to sell then I would ask that you consider working with us within the systems and processes that we have built as they are all driven by the outcome of getting you the best possible price within the shortest amount of time. We are always striving to improve and think of ways that we can do things differently and innovate to offer the best solutions for hospitality business owners.
Where off market deals can work is when we are speaking to a potential buyer who tells us what they are looking for and we take a very targeted approach to finding them what they want and we have creates successful sales for buyers by listening to this and approaching business owners directly. Working in a niche industry within a relatively small community such as the ACT I have been successful in this approach on a number of occasions and it can work very well.