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business sellers and acquirers

Acquisition Support Services – On-Market & Off-Market Search

The first step in any acquisition process should be to document the criteria which a valid target company must meet.  Once the criteria have been set the search process can begin.  The first step in searching will be ‘On Market’.

‘On-Market’ means that the search will be limited to businesses advertised for sale.  The majority of businesses for sale appear on the 2 largest business-selling websites – Businessesforsale.com and Daltonsbusiness.com.  Despite the great majority of businesses on both these sites being micro businesses, shops, restaurants, pubs etc. larger businesses are also to be found there.  However, there are also a number of ‘industry’ websites which specialise in advertising larger businesses.  In addition, corporate finance advisers, such as Anderson Shaw, continually receive notification of businesses as they come to the market and sometimes before the businesses are advertised generally. 

Unfortunately, many businesses are advertised with incomplete basic details, without a Guide Price and sometimes even the Annual Sales figure is excluded so it is normal for the list of possibles from the On-Market search to reduce substantially as enquiries are made.  It is also frustrating that in too many cases a business advertised for sale turns out not to be available because the seller hasn’t been diligent about updating the advertisement.  

If the On-Market search is not yielding sufficient targets it will be necessary to go to the Off-Market approach.  As a rough guide, we find that between 10% and 15% of businesses approached in this way are willing to engage in a sensible conversation about a sale.  A higher percentage of business owners will say that they are interested in selling but their price expectations will be unrealistic.

Off-Market work is very time-consuming – each company on the ‘possibles’ list has to be researched to determine its activities, financial profile and ownership before any approach can be made.  Therefore, before attempting to generate a ‘possibles’ list it is important to narrow the search criteria as much as possible.  The criteria can always be widened if the list is too short.  Most business databases do not contain reliable financial information (instead sales levels and employee numbers are estimated using questionable factors) which adds to the challenge.

 

Anderson Shaw provides acquisition support services.  If you are planning an acquisition and would like to discuss how we may be able to support you through the process please contact us.


Anderson Shaw has offices on the outskirts of Coventry and provides business broker and corporate finance services for clients throughout the Midlands and the UK.

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