The situation
A Rajkot auto parts promoter wants to sell a minority stake to fund a new machining line. He knows two or three companies that might be interested, and a banker has sent him a list of forty names. He worries that if word gets out, his customers will think the business is in trouble and his competitors will poach his supervisors.
Kinds of buyers
Strategic buyers
Companies in the same or a related business: a competitor, a customer, a supplier, or a company wanting to enter your market. They often pay more because they can combine operations, but they also learn the most about you in diligence.
Financial investors
Private equity funds, family offices and other investors who buy for a return. They usually want management to stay, and they care about governance, reporting and an exit in a few years.
Insiders and family
Managers, a family branch or a long standing partner. These deals often need outside funding and a careful valuation, because the buyer already knows the business.
How to rank the list
For each name, write one line on why they might buy and one line on why they might not. Then score them on a few plain questions:
- Do they have a reason to want this business now?
- Can they afford it, or raise the money?
- Have they done deals like this before?
- What is the risk if they learn about you and do not buy?
A competitor with a strong reason but a high risk of misuse might be approached later, with less information, or not at all.
Approach in waves
Send the teaser first to the eight or ten best fits. Their response tells you whether the price expectation and the story work. A second wave can follow if needed. Approaching everyone at once makes it harder to keep the process confidential and harder to give each buyer attention.
Keep it confidential
- Use a code name for the deal in every email and document.
- Send the anonymous teaser first, and the information memorandum only after an NDA.
- Keep a record of who received what, and when.
- Agree what you will tell staff, customers and banks if the news leaks.
A short checklist
- A long list with a reason for each name
- A ranked short list for the first wave
- A named person responsible for each approach
- NDA status tracked per buyer
- A plan for leaks
Where Synerger fits
The buyer list lives in the deal pipeline, with a stage, an owner and a next step for each name, and filters by industry and region. Once NDAs are signed, the same records carry into due diligence. The teaser and IM you will send are set out in information memorandum basics.