5 Ways to Stand Out as a Buyer

We’re entering into a new phase in society, one that may or may not feel surreal—baby boomers are retiring. This momentous generational shift means there are tremendous opportunities for new and experienced entrepreneurs to acquire pre-existing, already established businesses. 

Harvard Business School lecturers, Richard. S Ruback and Royce Yudkoff claim that “the phenomenon is universal—founders create these businesses, they build them over 20 or 30 years and, inevitably, they approach retirement. And for many of these people, they don’t have a daughter or son who wants to take over the business and they need to sell the business. Because the business not only needs to give them the capital they need to retire, but it also needs to have a successor CEO.”

According to the Canadian Federation of Independent Business, over the next several years, 72% of Canada’s longtime business owners will decide to leave their businesses. This drastic shift—changes in legacies and ownerships—will leave approximately $1.5 trillion in business assets free to be purchased by entrepreneurs. 

Money Isn’t Everything

In the world of mergers and acquisitions, this developing paradigm implies that it’s currently a buyer’s market. Even if the market is leaning in favour of buyers, interested entrepreneurs should never assume that an acquisition of a business for sale is a seamless and easy undertaking.

In this market, buyers shouldn’t expect to sweep up successful business acquisitions simply because they have the means and enthusiasm to do so. Acquisition takes dedication and hardwork. Bringing a superb offer to the table might be the infallible way to secure a deal on a home for sale, but that’s often not the case for business purchases. 

Adequate offers are important. Capital is attractive to sellers. Yet, a longtime owner of a well-established business, despite their wishes to retire, will hold onto their business until they find the buyer who is the right fit for them and their business. Owning a business and carrying out a legacy for an extended period is an emotional investment. Sellers of highly reputable, desirable businesses look for buyers who can bear the weight of their emotions and continue to carry out the hard-earned legacy of their enterprises. 

Regardless of the time and (or) market conditions, building a strong rapport with your target’s seller and standing out to them as a buyer will greatly benefit your acquisition, easing the path from negotiations to transaction and succession. 

Be the Diamond, Not the Rock

Here are the top 5 ways to stand out as a buyer and to make good impressions on a seller.

1. Be confident in your target criteria. Know your needs, objectives and desires for your future business. 

Sellers and sellers’ intermediaries (their business brokers) have very little confidence in buyers who don’t show meaningful motivation to move forward with business transactions. A huge percentage of buyer inquiries about businesses for sale never manifest into an offer because most buyers are unsure of their entrepreneurial goals despite their actions to begin their search.

Business sellers value buyers with clear entrepreneurial goals. Sellers admire buyers who know why they are buying a business, the type of business they want to buy and how to manage a business post-acquisition. 

2. Get to know the intricate details of your target business before making an offer.

When you purchase a business, you have the unique ability to interact and build a relationship with the business owner (seller). Take the time to research the target, meet with the seller and understand the corporate details of your target. This shows a seller that you are willing to dedicate yourself to the business. Aligning trust with your seller is beneficial to the success of your offer and transition to ownership because it gives a seller confidence in your ability to carry out their legacy. 

3. Always be prepared through every phase of the acquisition process. 

When you prepare for an exam, you increase your chances of success. Preparation is key during acquisition—being knowledgeable on the process and equipped to follow through on the necessary steps of acquisition shows the seller that you’re professionally ready to handle the business. Have your finances in order before you make an offer. This way, you can guarantee that you’re making an offer on a business that is affordable for you. This shows a seller that you’re respecting their time and capable of moving forward with a transaction when the time comes. 

4. Build a team you trust and get your advisors on board early in the game.

It’s never too early to connect with advisors, especially your lawyer and accountant. Having a trusted team of people behind you, who will support your acquisition, shows a seller that you’re credible and committed to the process.

5. Make decisions thoughtfully, but move on them quickly.  

Understanding your target business, being prepared for the diverse phases of the acquisition process and building a team early on are all steps that will allow you to make meaningful decisions during acquisition. Likewise, each factor equips you with the knowledge and support you need to act quickly during acquisition. It’s easy for buyers to get caught in stages of searching, offering and negotiating. When a seller knows that a particular buyer is a right fit for their business, they want to get the deal done and they want to get it done quickly.