6 Tips for Selling a Distressed Business
In a perfect world, businesses would only be sold when they're healthy and attractive to buyers. Unfortunately this isn't always the case. Trying to market a business as an appealing acquisition while it's in decline can be difficult, but it’s not impossible. Here are six strategies to use when selling a business in less-than-ideal circumstances:
1. Focus on the positive. Concentrate on the strong points of your business when meeting with potential buyers. Even if your current financial situation isn't what you would like it to be, think about other areas of the business that aren’t distressed. Perhaps your business is established within its industry and is known throughout the community. That rapport and community presence is hard to achieve. Buyers should be aware of it.
Likewise, trained employees can be one of the most valuable and attractive assets when selling a business. If the work of finding, hiring and training new employees is already done, the buyer can use the employee base as a springboard and focus efforts on future growth. If you have a core group of employees that are invaluable to your business, bring that to the attention of potential buyers as well.
2. Identify synergies. It's important to uncover the synergistic value of your business. Your business is failing as a stand-alone entity. However, if your business was folded into another operation, what might the value of that business be to the new owners? Would the business be immediately accretive to the new owner? Despite many synergies, will the business still lose money or barely break even? Some of these questions may be hard to answer until an actual buyer shows up, but an experienced intermediary can help you think through various scenarios so that you can determine the various price, terms and deal structures.