You will now need to decide what type of buyer you are targeting and what these buyers are likely to be looking for in your business. It will help if we establish some basic concepts and definitions about buyers in trade sales.
Trade sale buyers are usually divided into two groups, called ‘financial’ and ‘strategic’ buyers. Financial buyers consist of owner/managers and those wishing to operate the business on their own. Strategic buyers are institutional and other buyers who look to take over, or merge the target business within their own operations. The strategic buyer classification also applies to what are known as ‘industrial partners’, or a ‘big brother’ from your own industry.
Disposals though a trade sale can be for all, or a majority, or minority part of a business. Minority sales in the UK are often to venture capitalists (known as VCs), or private investors (who are often known as ‘Business Angels’). Majority sales could be to strategic buyers or industrial partners. You should also be aware that a strategic investor (who could be a public company) is likely to take a very long-term view of its purchase, whilst the financial purchaser could have a short-term exit strategy.
It is usual for VCs and Business Angels to take minority stakes in businesses, and rely entirely on senior management to run the business. Here your approach might be to partly exit the business as step one in a two-staged exit plan. Your first step could be to sell a minority interest to investors and remain in the business as CEO for an agreed period. Step two could be to sell the balance of the equity to the investors after you have groomed a senior manager for the CEO role. Alternatively, the investors will have their own exit strategy, which could be for a sale of the whole business through a flotation, or through a secondary buy-out (that is, a sale to another VC), thus ensuring that you fully exit the business at this stage.