The Art of the Deal: Making your business irresistible to buyers
Following our recent Lunch Money interview with Andrew Cassin, founder of Cassin Advisory, we explore the challenges of selling a business and discuss strategies that businesses could use to enhance their attractiveness to potential buyers and help with the transition process.
Andrew is a seasoned expert in mergers and acquisitions (M&A), who specialises in the transition of ownership for privately owned businesses in the lower mid-market. Andrew has over 20 years of front-line experience, helping business owners with thorough preparation for business exits, and offering invaluable insights for business owners aiming for successful and profitable transitions. He shares with us candid valuable knowledge and experience in our chat.
Challenges faced by owners when selling their business
Selling a business can be a tricky path to navigate, regardless of the motivation to sell many owners face similar obstacles in their way. These could include:
● Lack of expertise
● Energy depletion
● Owner dependence which can impact a successful ownership transition
● Accurate VS ‘Pub’ business valuation
● Lack of systematisation within the business’s processes and structure
With the help of an expert, these obstacles can be overcome by implementing a number of strategies, in particular when it comes to Principle Dependance in sales. Such as, tailoring approaches to buyer types, emphasising the need for owner disengagement from day-to-day operations, and addressing challenges like technical know how and employee loyalty.
When a business relies heavily on the owner to generate sales this can be a red flag for some potential buyers, and considered risky.
Finding a buyer
After completing a diagnostic about the business for sale we can then identify the buyer persona and hone in on finding the right buyer for the business. Could it be a competitor, a private equity purchaser, a financial buyer, strategic buyer or an international buyer?
Importance of Informed Analysis
Being realistic about your business valuation is highly important when selling. Navigating ‘pub valuations’ and retirement expectations can be react. However when using informed data analysis we can address misconceptions and guide sellers towards realistic valuation discussions for business transition.
Moat Significance
When selling your business it is important to identify the strengths of your business. These strengths then act as a ‘moat’ to protect and secure your business for sale. Whether it be identifying product range, employees, systems or the service you provide to customers these all act as a ‘moat’ to ensure that your business can remain attractive to potential buyers.
Significant relationships
We explore the significance of relationships and timing in deal-making. Highlighting the value of experience and network connections in facilitating successful transactions, and identifying key motivations behind selling a business, ranging from maximising profit to ensuring a legacy and finding the right fit for the future.
Video Summary
04:40 We discuss the challenges faced by business owners in selling their businesses.
08:47 How does principal dependence and lack of systemisation impact on a valuation?
12:52 Strategies for reducing principal dependence in business sales.
17:02 Impact of private equity’s hunger for deals on the lower mid-market.
21:18 Navigating pub valuations and retirement expectations through informed data analysis.
25:33 Exploring various motivations for selling a business
29:41 Discussing the significance of a business’s ‘Moat’
33:59 Exploring the importance of systemization in business operations
38:15 We explore the significance of relationships and timing in deal-making