What can you do to ensure you attract a serious buyer – as opposed to a flood of suitors who are unlikely to pan out?
Target your sellers. That’s one thing a lot of these people aren’t doing. They’re trying to send out press releases and they’re not doing their due diligence themselves as a seller. They’re not targeting private equity companies and family offices that are interested in this. They’re just trying to go out to the open market.
So what happens is you get a thousand phone calls from people trying to find out information. They’re not targeting the right people, so they’re getting a lot of tire kickers and they give up.
For us, where we did it differently, I put together a pool of about 100 different potential buyers that meet all of the application standards here in the state of Washington. I did that first and then we marketed it second. We sent the press releases privately to all these people and said, “Hey, here’s this offering. If you’d like to get more information please sign this NDA (nondisclosure agreement) and get it back to me.” So we were very surgical about it.
What are major red flags when evaluating potential buyers?
Are they willing to show assets? When I send the NDA I prove that they have $50 million in the bank before we go into serious talks with them. That’s one thing you can do that’s pretty normal. Qualify your buyer.
The other piece is a lot of people are trying to do these reverse mergers and penny stock deals. That’s a big red flag. All they’re trying to do is make a play and make money on your business. These guys come out, they’re trying to put you on an exchange, and some of them don’t have the money to do that. They’re trying to charge that back to the companies and they do a little bit of paperwork.