Once a potential buyer has been identified, it is a question of validating their level of interest.
The buyer begins by receiving a summary of the transaction, the main points are the industry, geography, and the size of the company, thus the transaction. Certain strategic elements can be unveiled at this stage.
Once a potential match is discovered, the buyer signs a confidentiality agreement. Then a meeting between the buyer and the broker allows to examine and establish the mutual interest to pursue. At this stage, the buyer learns the name of the company, reviews certain aspects in more detail. These may include the important stages of the development of the company, its financial results, if the site is rented or owned, certain issues or potential challenges of the transaction. After the presentation of the company, the financial statements can be exchanged afterwards for a more in-depth analysis. It often happens that a subsequent meeting takes place with key employees of the buyer or with their accountants to assess the opportunity – and all this before meeting the client who is selling.
The objective of these preparatory meetings is to reduce the number of visits for the client- Vendor. This helps us with the confidentiality and with the time management of the entrepreneur. The number of buyers who will meet the Vendor varies but from experience we speak of less than 20% of those who have had the presentation.
Buyers will withdraw due to lack of synergies, strategic positioning that does not suit them (perhaps the product/service line, the geography for example). As a broker, we may screen out buyers due to lack of funds, or also based on our experience and judgment of the potential match. In short, not all interested parties make good candidates.
As we say to our clients: let us manage the process and the qualification and You entrepreneurs run your business – this will bring more value to everyone.