No one would claim that selling a business is a simple process. Yet, when it’s time to sell, many business owners try to do it themselves. Or they sell to a partner or a competitor or someone else that’s familiar to them without ever testing the market or learning what their business is truly worth. So how exactly does a seller find a proper valuation? The most sure-fire way: hiring an experienced advisor to run a structured auction process.
What is a structured auction process?
A structured auction process is a sale that operates as a hyper-competitive auction, where buyers bid against each other in order to win. When organized by an experienced investment banker, a structured auction process ensures that a sellers gets the necessary eyes on their investment opportunity.
When our advisors organize auctions, they provide clients with access to thousands of prospective buyers. This structure and this access carry additional benefits, which we’ve summed up below.
Five reasons to conduct a sale as an auction:
1. Bring competitive forces into play.
You’re not just working with an advisor; you’re working with their extensive network of buyers and sellers.
2. Find more matches to your deal terms.
Having a larger network to work with plus having an advisor who understands the wants and needs of both the seller and the buyer means more power on your side.
3. See multiple types of deal structures.
This plethora of options gives the seller (you) more likelihood of getting the ideal deal structure.
4. Pit buyers against one another.
Using some friendly competition to drive improvements in price and terms. If you are having a one-off conversation with a buyer, they will often hold information back as it relates to price or deal terms. They have no incentive to come to the table with the most they are willing to pay or the best terms when they know you are not considering other offers. A structured and supervised deal mitigates this worry.
5. Keep the process moving.
It always comes down to timing in the end. A structured process forces all parties into a certain cadence that ensures a deal moves along at a productive but accepted pace. This is important for everyone involved. Often, if there is no set process or plan either party can easily drag things along.
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Caber Hill Advisors is your partner for growth. We're committed to working with business owners so they can successfully fulfill their personal and professional legacies. We draw on deep industry experience to help our clients identify and capitalize on the best opportunities available.
Across the team is a well of expertise in serving small and middle market companies in several specialty industries. If you’re interested in learning more, contact any one of our leading advisors to have a conversation about what’s important to you, your business, and your future.