Our start up is nearing the acquisition phase but so far we've been reaching out to our target audience in retail software through LinkedIn to set meetings. I'm curious if there are other ways we could be exploring to secure meetings with buyers?
Are there paid services that can help us network or a different site where buyers of patents/companies meet?
I saw several examples of patent auction sites online, but those are focused on submitting the idea and waiting to hear back, I'm curious if there are better ways to get a meeting. Any advice would be appreciated. Thank you.
If you're just selling intellectual property and not an operating business, it's a very different scenario. If you're holding patents, you should be aware of the companies that have tried to license your IP, have been caught infringing, or have similar art they might be interested in adding to their portfolio. The law firm that handled your patent filings is probably your best place to start in spreading the word that your IP is available for sale. It is quite certain that your law firm knows a bunch of patent "trolls" who do nothing but buy patents and file lawsuits, but not operate companies.
If you're talking about the company as an operating entity and not just the IP, there is no "acquisition phase." Perhaps you intended to exit the company as quickly as possible, but the phase is "exit" which can be many things from sale to retirement. Most companies stay in business doing what they're doing and never have any intention of selling...so it's not inherently a natural phase to sell the company.
In selling a whole company, the first thing you have to ask yourself is why you want to sell your business, because any buyer is going to have that question at the very front of their mind. Why, if the business is doing so well, would you ever want to let go of it? This initial reasonable suspicion is a big barrier and you'll need a very clear and authentic reason, no soft peddling it. The same buyer might also think that if your business did well and you're willing to walk away from it, they should save their money and build it themselves following your exact model now that you've laid the path.
The trick, if there is one, to selling your company is establishing its value at a price someone else is willing to pay. Heck, buyers sometimes don't even take interest when the company is available under value. In addition to being able to make money with your former company, the buyer has to have an interest in the industry and continuing in the manner in which you set everything up. If it's a hassle in any way or doesn't align with their personal interests, the deal can be very tough to move through.
The more work you're able to do in advance, preferably by a neutral third party, to determine the value of your company (not the price you imagine selling for), the more likely you'll find a buyer quickly. If the buyer has to do all the diligence work, they're going to have to like your business a lot more than if it's just an engine that's already assessed. It costs money to do the diligence work, and asking them to bear the burden of conducting it slows the process.
Lastly, the buyer is going to want to know what happens when you're not there anymore. How dependent is the company on your personality, leadership, or contacts? Are you hoping to stay and become an employee instead of owner or are you taking this as an opportunity to go do something else? And again, why?
As far as where to look for buyers, it varies a lot depending on the industry, the dollar volume in gross sales, the geography, and whether you have a supply chain that feeds your business to make its end product. Sometimes your competitors are buyer candidates, sometimes suppliers, sometimes partners, or it could be someone completely new to the industry looking for a shortcut.
Your best connections are going to come from your existing contacts, letting them know you are considering finding a buyer for the company (and again why), so they can spread the word. People in the law office that handles your legal services may spread the word to similar clients, if you've used recruiters to fill job positions, they're very well-connected, if you use an accounting firm, they too probably have other similarly geared clients who might want to absorb your business.
Design and manage your business to run continuously as a profitable entity. Your business should provide a cash flow stream that is greater than anything you could generate with any traditional investment you could make with the money you get from a sale - or will do one day. Its a long term strategy, not a get rich quick scheme.
However, if someone is willing to pay more than it is worth, sell. However, recognize, this is a matter of luck, not skill or planing,
There are business brokers available in most major cities. Google the term business brokers and/or ask your network for the same. Lawyers, accountants, and other service professionals serving your industry can also be good resources. Lastly M&A folks in yiur target acquirerr companies are paid for precisely this. Good luck.
Depending on the valuation, you should use am M & A professional/banker to represent you. They have better access to buyers and could have some as clients already. Usually they do not do deals of less than $5 mm and prefer north of $10 mm. You should reach out to Alejandro Cremades at Panthera Advisors. He was the founder of CoFounder's Lab and now does exactly this. Alejandro@PantheraAdvisors.com
You can try UpwardExits
The solution to a lot of the issues is an intermediary. At the serious end this is an investment bank. How much is your valuation and annual sales?