There are many facets a private buyer can bring to a transaction which are deemed very important by the seller and hence, why a private buyer is seen as a very credible buyer option, including the following:
- Preservation of the owner’s legacy – the seller will typically have spent many years building their business and will wish for it’s name and presence in the market to continue long after they have retired from it. A private buyer will wish to use this as a springboard to build the business into the future and capitalize on the hard work by the original owner(s).
- Retention of all existing staff – typically an SME owner will have run their business with a lean staff complement, often with a number of those staff members performing more than one role and therefore, all staff are likely to be vital to the delivery of the products/services delivered by the business. A new owner will probably wish to add to the staff numbers rather than reducing them. Equally, an SME owner will likely have built personal relationships with many of their staff and those staff are likely to have worked at the business for many years and therefore, the owner becomes attached to them much more so than in a corporate environment.
- Continuation of business at the existing site(s) – the new owner will wish to take over a business and not normally change too much within the first 3-6 months preferring rather to get to grips with how things work, get to know the staff and their respective roles, the customers, the suppliers, the financials and therefore, the continuation of trade from the existing site is a crucial aspect in all of this.
- Business as usual post completion – it is important for staff, customers and suppliers alike to know that, under new ownership, the business will be operating as before under the previous owner. People generally don’t like ambiguity or uncertainty and so, it will be important for the new owner to reassure all stakeholders that the intention is to carry on and build on the legacy left by the previous owner.
- Peace of mind from the buyer being seen as a “safe pair of hands” to operate the business in future – the new owner will usually have some relevant sector experience to that of the acquired business and therefore, will be able to “hit the ground running” once the acquisition takes place. This relevancy can be demonstrated by the private buyer throughout the business buying process as the relationship develops and this, in itself, will be a key facet as to why a seller will see you, the private buyer, as a credible buyer.
- Future development of the business from the foundations built by the owner(s) – owners of SME businesses have often not invested heavily in sales and marketing over the years, preferring to handle the role themselves or perhaps not seeing the benefit of committing a high salary to pay for someone to drive the sales and marketing function. This presents a great opportunity for a private buyer to be able to add in sales and marketing strategies, including an improved website, SEO, social media and PPC campaigns, etc to drive future sales growth.
- An option for the seller to retain some equity if they so wish – if an owner doesn’t wish to fully retire from their business, it might be that they are happy to sell less than 100% of their equity. This is a really key facet of which the private buyer can avail themselves due to the fact that debt funders are really keen on this aspect whereby the “old guard” and the “new guard” come together as one and it can be a really powerful mix. A buyer can’t underestimate how important this facet is in the search for a target business. It genuinely makes a very big difference when it comes to funding the transaction.
- An ongoing role in the business for the seller, offering a partial retirement option if required – as with the owner retaining an element of equity in the business post-transaction, a role for the seller in the business post-deal is something which a private buyer can offer. Of course, the working relationship would need to be developed for mutual benefit but again, this could work really well, particularly in those businesses with more technical or specialist (often engineering focused) products and services. The arrangement might be for a short term or be reviewed after a specific period, for example, 12-18 months to ensure the arrangement is working for both parties. Either way, it is really helpful particularly if the owner is not too comfortable with the idea of immediate retirement and would prefer a phased retirement option.
