| The perfect party – who will pay the highest price for your business for sale – might be working in a totally different sector on a remote continent. On your own, you would have no chance of finding that buyer. Without outside help, it is likely that you will end up marketing the business to a small circle of contacts in your sector. This will not only have the effect of making the details of your company and its sale public knowledge – it also reduces the level of competition, and, in turn, the price you eventually achieve for your company. Get help from another intermediary Appointing a broker to manage the selling a business process can solve all these problems, but creates another issue: how to choose a good corporate broker in an overcrowded and relatively unregulated market. Many of your company’s existing advisers – accountants and lawyers – will be keen to advise you on the sale of your business to boost their own revenues. But they are unlikely to be in the best position to carry out an international search for buyers. Although good firms will either be staffed by chartered accountants or qualified lawyers, or accredited by the Financial Services Authority (FSA), anyone can sell themselves as advisors on mergers and acquisitions, whatever their qualifications and experience. It is absolutely vital that you accurately gauge the depth of a potential advisor’s experience and track record. You will need to ensure they can put together a detailed information memorandum on your business. You should ask direct questions regarding how many deals a broker has completed over the past few years and how often they have failed to sell a business. Make sure you quiz potential intermediaries over their view of the sector you operate in, the general prospects when businesses like yours are put up for sale, and how they would advise approaching the sale process. As well as being informative, it will also allow you to gauge their knowledge of your sector. There are sector specialists, by the way – but you must ask yourself whether they would be able to find unusual or financial buyers beyond the horizons of your own industry. A good broker will have worldwide contacts – not just acquisitive businesses, but also venture capitalists and, most importantly, brokers and consultants. Using these resources, and thinking laterally, they should be able to come up with a shortlist of suitable buyers and have the knowledge and skills to identify their real decision-makers. If confidentiality is important to you, ask brokers how they can ensure discretion. What fees will I have to pay? Most brokers calculate fees according to the so-called ‘Lehman scale’, charging 5% on the first million, 4% on the second, 3% on the third, 2% on the fourth and 1% on the remainder of the sale price achieved (i.e., if it is sold for £3m, the fee will be £120k; a £5m price will mean a fee of £150k; and for £10m £200k will be levied). Many will also want a retainer to guarantee your commitment to the sale and remunerate them if you pull out – meaning that you really need to be sure you want to sell the business within a reasonable time-frame before commissioning an intermediary. Fees charged to the buyer incentivise the broker to sell your business for the highest figure. One of the great advantages of having an intermediary is that it will allow you to maintain an arms-length distance from the negotiations over the price and terms. A success-linked fee will provide lots of motivation for your broker during that crucial time, when he or she will have to negotiate all the barriers put in your way by the purchaser’s advisor or solicitor, who will be determined to lower the final price tag. Be wary of ‘free’ advisers who say that they will collect fees from the purchaser. Their target will be to achieve the aims of the purchaser – so the lowest possible cost on the best possible terms for the buyer. Paying a six-figure fee to your own intermediary might seem expensive, but if they can get a spectacular price for your business, it will clearly be worth it in the long run. DIY is stressful Marketing your business yourself can be a stressful and complicated affair. Advertising can be one route, but ensure that you use a sufficiently targeted website or newspaper rather than a trade magazine. Try to anonymise your business. It can be disastrous for a company if its employees discover that it is being sold – you can haemorrhage staff, who, worried about their future, apply for other jobs; you can leave yourself exposed to competitors galvanised by, and ready to capitalise on, your transitional state; your sales and accounts figures plunge; and the putative value of your company plummets. For much the same reasons, and particularly if you work in a small market, approaching competitors can be dangerous. They could attempt to poach your staff, and simply use knowledge of your business to compete against you, without any real intention to buy. However, you should not discount them as buyers. They will often understand your business model better than almost anyone else, and will be able to take advantages of new efficiencies of scale – meaning they can offer higher sums of money for your company. But, of course, anonymity and stealth will be vital. An alternative – and one less plagued with problems – is to approach suppliers or distributors, who might be able to vertically integrate your business into theirs. However, you should not discount businesses in a totally different field. They might see your company as a money-spinner, or, if they are listed, a way to prop up their share price. Look abroad Remember not to confine your search solely to the UK and Ireland. There are probably a host of suitable purchasers in other European countries, not to mention North America and Australasia. And remember that the growing economic strength of countries such as China and India means that increasing numbers of potential buyers are emerging outside those traditional areas. It will be harder for the individual vendor to access decision-makers in financial buyers such as merchant banks, venture capitalists or individual private investors. Indeed, they may be wary of businesses approaching them without representation. But, with sufficient research – easier now the internet is at everyone’s disposal – it is possible to dig out a handful of more far-flung or unlikely buyers. Trade magazines, telephone directories, and other lists of businesses such as Kompass can be useful. And don’t forget that it is now possible to access Company House records online. An internet search engine may well be the best way to identify potential buyers. But bear in mind that an experienced third-party point of view could be far better at finding potential buyers and a credible contact when it comes to negotiating with senior figures. Nevertheless, it’s still important for you to understand what buyers might be looking for in a business for sale. | 
