How to Find the Right Buyers
If you’re a Founder looking for potential buyers for your business, the best time to start building relationships with potential buyers is now, even if your ideal timeline is still a few years away.
In my case, I began laying the groundwork three years before my exit. I met with strategic buyers, private equity firms, and family offices. Here’s what I learned.
1. Cast a Wide Net Early
You’re not looking for just any buyer, you’re looking for the right one. Use your network to find connections to buyers. Study PE and family office portfolios to identify overlapping interests or existing relationships.
2. Validate the Buyer AND the People Involved
I received glowing references for one managing director—until I realized they were all from his time at a prior PE firm with a much better reputation. None came from Founders who had sold to the actual firm bidding on my business. That was a red flag. You need references about the current bidders and the person leading their deal.
3. Understand the Landscape
Strategic buyers offer fantastic synergy, but their ability to close highly depends on market timing. I explored a sale to large insurance companies, so our franchisees would serve more families. But the buyers required more control over quality and by the time I worked through that the buyers were in the midst of post-COVID chaos, executive turnover, and stock declines. Their timing didn’t align with mine.
4. Get Visible and Build Relationships
Attend industry and investor conferences. Many investment banks also host events where buyers gather. Reach out on LinkedIn. Many buyers are happy to meet Founders long before a formal process begins.
5. Red Flags to Watch For
- Valuation ranges that seem inflated.
- Pressure to sign exclusivity early.
- Not in sync with your core values.
- Poor post-sale references from other Founders.
- Calls on Thanksgiving and other holidays.
Read next: When Is the Best Time to Sell My Business?
Need help identifying and vetting potential buyers? Founder 2 Founder guides Founders who will be above $5M EBITDA in the next 24 months through the entire buyer identification and selection process. Learn more about our exit planning services.
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