There are a number of things to look for when choosing a business broker. At the top of the list is their ability to effectively (and confidentially) market...
One of the questions we get asked early on by prospective clients is how to market a business for sale. It just so happens that this is one of our favorite questions to answer.
There are a number of things to look for when choosing a business broker. At the top of the list is their ability to effectively (and confidentially) market your business for sale.
In this article, we’ll discuss the primary framework that business brokers use to sell a business. We’ll take a look at the most effective marketing channels, the primary pieces of marketing collateral used to represent the business, and how to keep the sale confidential. Lastly, we’ll offer some tips on how to choose a firm with great marketing chops when you’re looking for a business broker to help you sell your business.
Who this article is for: This article is for owners of lower middle market businesses (i.e., annual sales between $2M and $25M) who are considering selling to an outside buyer.
The Importance of Great Marketing When Selling Your Small Business
There’s a tendency to compare selling a business to the process of selling a house. Business owners sometimes think it’s just a matter of putting together a slide deck with some basic information, then posting an ad on a website.
In reality, selling a business has very few similarities to selling real estate. The time and care that go into preparing the marketing materials that business buyers will view is just one example of how the two sales differ.
The best business brokers will tell you that great marketing is the key to a successful sale process. It’s tough to sell anything that has sub-standard marketing, and selling a small business is no exception. Taking the time to prepare a business for sale — including the marketing materials that will be used — is an investment that will pay off in the form of more and/or better buyers, a stronger negotiating position, a smoother due diligence process, and a higher selling price.
Great marketing will do a number of critical things that support the entire sale process, including:
Accelerate the time it takes to get a deal closed
Represent your business in the best possible light
Control the amount and frequency of information exchanged
Attract serious, high-quality buyers (and keep time-wasters at bay)
Make both the sale process and major deal points clear to buyers
Speak to how buyers will view the opportunity to acquire your business
Signal that competent M&A professionals are representing your business
There’s a reason business brokers insist on investing time and effort on the front end: It ensures a solid start to the sale process and gives each subsequent step a better chance of success.
Where Do Business Brokers Market a Business for Sale?
One of the biggest impediments to selling a business is the lack of a ready-made market. If you’re selling a house, you can use national websites like Zillow or Trulia. There are also local multiple listing services (MLS) in every state. If you’re selling publicly-traded securities, you also have ready-made markets like the NYSE, AMEX, and NASDAQ.
When it comes to selling a privately-held company, no ready-made market exists: You will need to hire a professional to “make a market” for the sale of your business.
There are a number of resources that business brokers and M&A advisors use to market a business for sale. Which ones to use — and in what combination — depends on the business, the pool of potential buyers, and the sale process that the broker decides to run.
Here are the four most common channels used to market a business for sale:
Direct outreach to a custom buyer list
This method is used primarily for running a business auction process to sell your business. A targeted auction involves identifying a relatively small number of specific potential buyers (anywhere from three to perhaps a dozen) and reaching out to them directly via phone, email, U.S. mail, or social media accounts.
Internal (proprietary) email list of buyers
The best business brokers and M&A intermediaries are constantly contacted by buyers in search of great business-for-sale and investment opportunities. These buyers consist of private equity firms, search funds, strategic acquirers, and individual buyers.
A seasoned business brokerage firm will have a method for capturing buyer contact information and announcing new acquisition opportunities to them — usually via an email newsletter.
Social media platforms
Another form of digital marketing is using social media to reach potential buyers. This can be a broad effort that includes posting and/or advertising on Facebook, Twitter, and Instagram. Again, which social media channel to use is somewhat dependent on the type of business and potential buyer. For instance, a New York-based interior design business for sale may get noticed on Instagram, while buyers for a commercial sign manufacturer may be concentrated on Facebook.
LinkedIn is perhaps the most popular and effective social media platform for finding potential business buyers. Most decision-makers — like the CFO, CEO, owner, or corporate development director — are active users on LinkedIn. It’s also the social media platform of choice for private equity and the professionals who advise entrepreneurs like attorneys, accountants, valuation specialists, and wealth managers.
Business-for-sale websites
As mentioned above, there are few similarities between selling real estate and selling a business. One big difference is that there is no primary MLS for selling a business in the way that there is for real estate.
With that said, there are a number of proxies that can be used individually or in combination as part of a marketing plan to broadcast a business for sale opportunity. Some of the most popular online business-for-sale marketplaces include:
BizQuest (owned by BizBuySell)
LoopNet (owned by BizBuySell)
Flippa (online businesses)
EmpireFlippers (online businesses)
All of these websites advertise business listings from across the country to a nationwide audience. Listings can be filtered by type of business, sale price, location, and other metrics. While you’ll find mixed reviews on these websites, brokers almost always consider them useful as part of their overall marketing efforts.
An experienced business broker will know which channel — or combination of channels — will work best as part of a marketing strategy. Again, this is one of the main reasons it is difficult to sell a business without a broker.
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