Once your business is being marketed for sale the word will get out. How fast and how far depend on how it is marketed. I find that many sellers are concerned and don’t want employees, vendors and customers to know the place is for sale. As you might imagine, this can make it pretty hard to market the business opportunity!
One mistake that is easy to avoid is DON’T list your business with a realtor! A distressing number of realtors (both residential and commercial) are willing to take business opportunity listings even though they have no competency in the area and they provide a disservice to both buyer and seller. They have no ability to assist with determining and communicating value, they often do not understand how small business works and therefor are challenged to present one, they don’t even know the basic components of a business opportunity sale or how to close it.
This can be confusing because most business brokers have a real estate license. (Just because most business brokers have the license DOES NOT mean that people that have the license are business brokers!) The reason BBs have the license is that in most states the license is required to broker any transaction which includes a real estate related transaction such as a lease assignment, new lease or the sale of real property and one or more of those things often accompanies the sale of the business opportunity.
Getting back to the initial point… how the business is marketed and balancing the need to create awareness in potential buyers with concern about unwanted publicity. 1st of all: The word will get out. Your employees WILL hear about it. Your vendors likely will too. Your customers mostly don’t care. How you seek buyers will have a lot to do with how the word gets out. A residential broker will put the listing on the local MLS and probably in the local paper etc and want to put a sign in the window. These things guarantee that the word will spread to your employees, vendors and customers… but do not guarantee that the word will reach potential buyers! The worst of both worlds.
There are a bunch of online resources for marketing your business. If you have done a few google searches you will have found them. Bizbuysell, Bizqest, Businessforsale, restarauntforsale and more. You can even list your business on there yourself. They run about $100 per month each. The good news is that the inquiries come directly to you and you don’t pay commission. The bad news is that the inquiries come directly to you and you get what you pay for. If you go in this direction, you will notice that the brokers tend to put the listings out there on multiple sites. For example, if you list a restaurant with me it will likely be on 4-5 sites. So, there is a lot of overlap. These information sources are only in front of people who are looking for a business. It is possible to market the opportunity without naming it (even though in most cases people who want to can figure it out especially in smaller markets).
Over 10 years of doing this here is what I see in managing these inquiries: For a typical listing that runs for 6-12 months I will get about 30 inquiries. When I receive them I respond with a request for information about the potential buyer and for them to sign a non-disclosure agreement. About 20-25 of them will sign the NDA and respond to some questions about themselves. The next step is a phone call or a meeting where I will ask them more questions about themselves including how much money they have, what their timeline is… etc i.e. are they serious about looking and able to close a deal or just entertaining themselves? About half of the people that signed the NDA will go through this next step. Up to this point the potential buyer has not received the financials of the business or even the name. After this conversation or meeting, if it looks like the process is moving forward they receive those things. Of the 10-12 that have a phone call or meeting about 5-6 get the info. Typically 2-3 of them will pursue further information and 1-2 will write a letter of intent.
Different brokers have different approaches. Some send the financials to anyone that signs an NDA. This is something important to ask. When do you send confidential information to potential buyers. To me, it would be a red flag if the answer is “only after they sign an NDA” as an NDA does nothing to actually qualify the buyer.
One thing to keep in mind is that buyers who buy actually purchase the business they first inquired maybe 20% of the time if that. In other words they contact me about one listing and end up purchasing another some time in the future… most often because once they inquire we capture the contact info and when a new listing comes out that is a good match they find out about it directly from us. It also means that when I take a new listing it gets in front of about 4,000 potential buyers that have registered with us over the years.
Once the business is being marketed I always suggest that the seller let at least the key employees know about it. In the end they will find out because someone will mention it or when potential buyers are visiting etc etc. Having them find out by word of mouth is disrespectful of employee and they don’t like it. It also creates uncertainty which gets them thinking about job security… better to have the conversation up front! Most buyers are very concerned that employees would leave so addressing this up front is a better way to go.
Vendors are interested… but in the end they are mostly interested in making sure the new owner keeps buying from them. This is not something to worry about if they find out through the grapevine. If asked just tell them the truth. They may actually be a good source for a buyer! A manager of another place might ask a food rep if they know of any places for sale!
I don’t suggest going out of your way to let customers know but if one finds out and mentions it I just tell them, that “yes, we are interested in selling. Do you know someone looking for a good opportunity?” The chances are good that the reason they know (assuming the business is being marketed buy a business broker and not a realtor) is because they are looking or someone they know is looking and found it.
Don’t be afraid of people finding out, just take care that the people who find out hear about it the way you want them to!