I run a small landscaping business with about 15 employees. I've been thinking about selling in the next year or two, but I really don't want to pay a broker 10% or list it publicly. Has anyone here successfully sold a business just by telling people they know? How did you find the buyer?
Selling
Can you sell a business entirely through word of mouth?
Sold my auto repair shop to a competitor I'd known for 10 years. No broker, no listing. Just Asked if he wanted to buy it. We agreed on a price after two months of back and forth. Saved a ton on fees, but it took longer than I expected.
Word of mouth works if you have a buyer already in mind. Otherwise you're just hoping someone magically appears.
I tred it. Told my accountant, my attorney, and a few industry buddies. Got two interested parties, but neither could get financing. Ended up listing with a broker after 8 months of wasting time.
The problem with word of mouth is confidentiality. You tell one person, suddenly your employees and customers are whispering. That can kill your business before you sell it.
True. I only told two people I trusted. Still, one of my employees heard a rumor and quit. Managed to sell anyway, but it was awkward.
Question is whether you're selling the business or just the assets. Word of mouth might work for an asset sale where the buyer is another operator, but if you want a multiple on earnings, you probably need a broader market.
That's a good point. I'm not looking for a huge multiple. I'd rather sell quickly and cleanly to sokmeone who knows the industry. I'm okay with a discount for avoiding the circus.
I bought my business through word of mouth. Seller was a family friend. We used a lawyer to draft the agreement. It worked because we already had trust. No way I'd have bought it from a stranger without a broker.
Because brokers add value? Debatable. Most of them just list on bizbuysell and wait.
Brokers do more than that. They screen buyers, manage due diligence, keep things moving. But yeah, there's a range of quality.
The due diligence part is a beast. If you sell to a friend, you might skip some steps to preserve the relationship. That can bite you later.
What's your your business? I might be interested. I've been looking at landscaping companies in the southwest.
We're in the mid-Atlantic, so probably not a fit. But that's exactly the kind of random connection that makes word of mouth interesting.
Just be careful with 'quiet' conversations. I've seen deals fall apart because the seller told too many people and the wrong person got spooked. An NDA and a short list of targets is better than a PR campaign.
Bottom line: yes, it's possible, but you need to be proactive. Draft a one-page teaser, tell only trusted advisors, and ask them to discreetly reach out to logical buyers. Don't just wait for the phone to ring.