Video 16 – How Do You Check The Credibility Of Potential Acquirers On A Business Sale?

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Rob Goddard:

Do you check potential bidders balance? They just come out of the blue. So, seriously, what do we do to try and get rid of the time wasters?

Mike Whittle:

Well, as I’ve just said, we do hand craft a research list around the campaign. And what does that really mean in reality? What that means is our research director will go into the market using the tools we’ve got, to look at people who are acquiring in sector. Or who are acquiring in spaces where there’s like to be a good fit. So we can see what their acquisition criteria is, how much they’re spending, and we can look at their balance sheet to make sure they’ve got the money. If it’s a private investor that we’re putting on the list, typically as Steve mentioned earlier, they’d be part of our partner network anyway, in which case we’ll know all of the same bits of information about them, including how much fund they’ve got to play with in their investment criteria.

Mike Whittle:

So yes, we do quite a lot of research and the final piece of research we do before we ever enter into exclusivity with a particular buyer is a funds available check. To make sure they can afford to fund the transaction that they’re suggesting they’re going to enter into with our client.

Steve Barry:

Yeah. The only thing to add, I think in terms of process, would be if you look at the process we’d use from the research list. So typically 70 to a hundred names on the research list. We’ll contact pretty much all of those. We then would affect to see information memorandums go out to about a third of those. And then meetings with a third of those. Those that are interested in meeting with my clients, I always pre qualify. So I’ve always spoken to them first before they ever sit in front of my clients so I can try and satisfy myself that they have a genuine interest in buying.

Rob Goddard:

Yeah. There’s a recent phenomenon, and it is annoying. And Steve’s and Mike pre-call weed these people out. They described themselves as private equity. They are not private equity. They’d been on a course, they’ve paid 1,997 pounds or 397 pounds. They haven’t got any money, but they’ve got great ideas and they want to buy your business for a pound. We weed those out. They’re not private equity at all because they’ve got no funds under management. They’re just a private individual that wants to buy a business for a pound or something small. So those are weeded out. As a client of Evolution, you would never be put in front of those people in a meeting.

Mike Whittle:

You won’t, but the only thing I would add to that is don’t assume from that, that individual investors are necessarily bad. There’s a certain type of investor we’re talking about here. There are some private investors that want very much to buy a business that are potentially very good fits for some of our clients. And we will explore those.

Rob Goddard:

I’m sure they’ll have millions showing on their bank statements that they have ready to show to us before we progress in consultation.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

© 2020 Evolution Complete Business Sales Ltd.

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