Online platforms for buying and selling products and services is not a new concept. We are not only aware of it but use it daily in our personal and professional lives.
However, here, we are not talking about the standard eCommerce platforms that we use daily. The concept of buying and selling SMEs on online platforms is becoming increasingly relevant.
These online platforms assist SMEs in connecting with potential investors and buyers in the fastest way possible.
This guide will help you understand this new but rapidly developing concept of online platforms facilitating M&A for all types of businesses. It will also serve as a roadmap for the buying and selling process and what role the online platforms play in the entire process.
Digital Landscape: Understanding the Marketplace for Businesses Online
Before we explore the roadmap of buying and selling businesses on online platforms, let’s first understand an online marketplace for buying and selling businesses.
What Does A Business Marketplace Online Represent?
While it may sound very similar to an eCommerce platform, this idea is quite different. Online platforms specifically designed for the buying and selling of SMEs, traditional businesses, and online businesses are collectively known as online business marketplaces.
These platforms can be websites, mobile applications, or both, quickly connecting business owners to potential investors and buyers. The platforms provide a space online for businesses to be listed and marketed, as well as provide a channel to communicate with interested parties.
Why Are These Online Platforms A Boon for SMEs?
These online marketplaces have elevated SMEs in traditional businesses because they have taken them to a global level and exposed them to an international pool of potential buyers and sellers.
Making connections has become easier, faster, and more cost-effective. SMEs can reduce or avoid traditional brokerage fees and commissions with online platforms or marketplaces.
A business sale in Singapore via online platforms requires careful preparation Here’s a simple guide to walk you through the essential steps of selling your business online:
- Start by preparing your business documents. Make sure they are up-to-date and well-organised for presentation to potential buyers or investors. This step is crucial as it forms the basis of your offering.
- Determine the value of your business. Getting a clear picture of your business’s worth is advisable to set a realistic selling price.
- Consider consulting with a licensed corporate financial adviser to ascertain if the timing is suitable for the sale. Their insights could be invaluable in making an informed decision.
- Look for a reputable online platform where you can list your business. This is your gateway to connect with potential buyers.
- Create a profile for your business complete with all the required details like history, mission, products or services, revenue, profit margins, growth rates, and much more. Your profile should be secure, so that only interested buyers can access it with your permission to review your business data.
- Ensure the chosen online platform for business listing offers proper security and data privacy to protect sensitive information.
- Engage with potential buyers on the platform to find the right match.
The negotiation process for selling business on online platforms typically starts after a buyer has expressed interest in the company. Negotiation can involve a lot of back-and-forth discussion and compromise. Some key aspects of negotiation in the context of selling businesses include:
- Valuation: The seller has a certain asking price for their business, but the buyer may have a different view on the value of the business. The two parties will need to negotiate a price that they are both comfortable with.
- Terms of sale: The terms of sale can include payment terms, the closing date, and any contingencies that have to be met before making the final offer.
Potential buyers will conduct due diligence to understand the business’s legal, financial, and commercial status after connecting with a business on an online platform. This is an important step in the process, as it helps the buyer better understand the business and structure their offer.
Here are some of the key areas that potential buyers typically investigate during due diligence:
- Financial due diligence involves reviewing the business’s tax returns, financial statements, and other monetary records to assess its financial health.
- Legal due diligence is reviewing the business’s legal documents, such as contracts, permits, and intellectual property filings, to make sure that it complies with all applicable laws and regulations.
- Operational due diligence involves reviewing the business’s operations, such as its production processes, supply chain, and customer relationships, to assess its efficiency and identify any potential risks.
- Upon satisfaction, the interested buyer can make a non-binding offer as a precursor to the final deal.
Signing a Sale and Purchase Agreement and Completing the Sale:
- The deal is finalised by signing a Sale and Purchase Agreement summarising the full terms and conditions of the sale.
- Prepare for additional steps like transferring leases or other consents to the buyer to fully complete the sale, marking a successful business takeover in Singapore through the digital realm.
When buying or selling businesses, selecting the best online platform is crucial. Here are some factors to consider:
- Listing and Sale Charges: Understand the cost of listing your business and the charges upon sale. Knowing the financial commitment upfront is essential to avoid any surprises later.
- Services Provided: Look into the services offered by the platform. Some platforms provide additional support like expert advice, valuation assistance, or promotional services, which can be beneficial.
- Information Privacy and Security: Ensure the platform has proper privacy policies and security measures to protect your business information. This is vital to maintain confidentiality and trust in the process.
- Marketplace Reputation: Lastly, check the platform’s reputation in the market. An online platform for selling and buying businesses must have a good reputation to attract serious buyers and ensure a smoother buying and selling experience.
The journey of a business takeover online can be an exciting yet complex venture. Here’s a simplified guide to navigating the process of purchasing a business through an online platform:
Choosing the Right Online Platform:
- Opt for a platform with verified listings to ensure authenticity and reliability.
- Create an account on the chosen platform to onboard and start your journey towards
buying a business.
Connecting Buyers with Sellers:
- Once onboarded on the platform, search or get automatically matched with sellers that align with your investment criteria and requirements. This process helps in finding the right business opportunity.
- Reach out to the matched sellers through the platform, which acts as a bridge between you and the potential sellers.
- Engage with the sellers to receive detailed information about the business, allowing you to make an informed decision.
Offer and Negotiation:
- After reviewing the seller’s business profile and all supporting documents, negotiate directly with them to arrive at a price and terms that are mutually agreeable by both parties.
- Present your offer through the platform, which facilitates easy communication and document sharing between both parties.
- Once both parties agree on the terms and conditions, close the deal by signing the Sale and Purchase Agreement. This document contains all the terms and conditions agreed upon by both parties. This is the final step where your journey of buying business online culminates with a successful purchase.
The buying and selling of businesses have evolved in the digital era, with online platforms making their debut in the industry. As stated before, these platforms play the crucial role of connecting potential buyers with sellers and vice versa.
The roadmap shows how easy this process of connecting with buyers and sellers has become due to the growth of online platforms. These platforms for buying and selling SMEs not only provide convenience and efficiency for communicating with potential parties but also helps to reduce or even eliminate the need for brokers and their commissions.
The future of online platforms for buying and selling businesses is bright and will only grow in the coming years.