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Common Places to Find a Buyer for Your San Diego Business
Are you in the market to sell your San Diego business? Finding a buyer can be one of the more complicated challenges. You are definitely going to need a trusted and experienced corporate lawyer to help you with your sale. Here is a list of common places that you might find a buyer for your business.
San Diego Corporate Law: From Among Your Competitors
Many businesses are bought by competing businesses who are seeking to expand their market share. If you can find a competitor to buy your business, there are many advantages. First, competitors often have a better sense of value. How much to pay for an ongoing business can be a difficult question. An advantage of selling to a competitor is that your competition already has a good idea of how much your business is worth. This is true for various reasons: they are IN your business and know profit margins, how much effort is needed, typical overhead, etc. Second, competitors may have an easier time getting financing (if financing is the purchase method). Third, due diligence might be quicker. Fourth, if continuity matters to you, a competitor might be a good option if you want to see your business remain a running concern.
San Diego Corporate Law: From Among Your Customers
Another good place to seek out potential buyers is from among your customers. Here again, your customers are likely to know the value of your business. Admittedly, not all businesses are suited to be purchased by customers (for example, a retail shop). However, a business like a small service company with one or two main clients might be a good target for acquisition. Often, the target company is merged into the larger “customer” company and key management employees are retained to keep providing the same services. Another example would be customers who buy your products and sell them “downstream.” Those types of customers sometimes are seeking economies of scale and cost-savings by expanding “upstream.”
San Diego Corporate Law: From Among Your Business Partners and Employees
The folks who know your business best and, thus, know its value are your business partners and employees. There are many advantages to finding a buyer among this group of potential buyers including:
- Trust — you have been working together
- Due diligence is potentially easier and faster — they already know a great deal about your business
- Because of established trust, seller financing might be an option
- Third-party financing might be easier — lenders are slightly more inclined to lend if key management or employees are remaining to run the business; business history can be a lending criterion
- Your business will continue — assuming continuity is important
- Transition to new management can be smooth — this might be important depending on your customer/client base
- Given trust and collegiality, maybe the new owners will have you stay on in a consulting role — if that is desirable
San Diego Corporate Law: From Among Your Vendors/Suppliers
Vendors and suppliers are also a good potential pool of buyers. With vendors and suppliers, you are “downstream” and, sometimes, suppliers and vendors are in the market for sales/retail outlets for their products “downstream.” Advantages for them include cost savings, economies of scale, and upstream/downstream marketing synergies. In addition, if your vendors and/or suppliers have been steady and been with you for a while, they have generated some “inside” knowledge about your business — maybe not like employees and partners — but some knowledge about how much you sell and of what products, materials, supplies, etc. As such, your suppliers and/or vendors might have a good idea of value and if your business is a good expansion target. Again, not every business is ideal for being bought by a supplier/vendor. But, if you are looking for a buyer, at least consider this as a pool of potential buyers.
San Diego Corporate Law: Advertising and Brokers
Many businesses seek potential buyers through the more traditional advertising/broker approach. Like selling your house, you can retain a business broker who will list your business in various business journals, newspapers, and online sites. The upside to this approach is that many businesses are successfully sold with this method. On the other hand, the most obvious downside is the costs — like a realtor, the business broker will charge a fee.
Contact San Diego Corporate Law Today
If you are planning to sell your San Diego business, contact an experienced business lawyer like Michael Leonard, Esq. of San Diego Corporate Law. Selling a business is a complex endeavor. Mr. Leonard can draft or review the sale/purchase contracts, conduct the due diligence, ensure compliance with taxing and regulatory authorities, handle lender issues and make sure your sale is successful. Mr. Leonard has been named a “Rising Star” three years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Contact Mr. Leonard via email or by calling (858) 483-9200.
