How to Sell Your Company to a Rival

Truforte Business Group - Brokers Blog

Competitors might be excellent business buyers. They’re simple to discover and typically perceive an instant profit from purchasing your company. On the other side, they may be trying to either acquire your company for pennies on the dollar or merely check through your confidential data to get market information. As a result, while negotiating conditions, you must protect yourself. That is why using a Business Broker to act as the intermediary is almost always the best option.

Finding Competitors

There are three sorts of competitors. Direct rivals that service the same market and clientele may be the most evident companies interested in purchasing your firm. Indirect competitors often serve a different, but nearby, region to you, while close competitors typically serve a different, but adjacent, territory to you. The latter classifications may not spring to mind right once, but they are important to consider when determining who to promote your company to.

How to Value Your Company

When you have a large marketing effort, the goal is that you will be able to receive accurate pricing from market competitors. However, if you just exhibit your company to a few rivals, you will be at their mercy. With this in mind, it’s a good idea to begin the process of knowing how much your company is genuinely worth. You may also need to adjust your value to the unique customer. For example, if your firm is worth “x” to a typical buyer, it may be worth “x+y” to a direct buyer who, by purchasing your business, will not have to lower her pricing to compete with you or spend more money on marketing to keep her consumers.

Keeping Your Company Safe

It might be difficult to know if a rival wants to purchase your company or just get access to your client list, so providing sensitive data sparingly is a prudent approach. Aside from a casual conversation, it’s advisable to say little, if anything, until you have a confidentiality agreement in place to secure your information. Employee, the vendor, and customer names, as well as predictions, plans, and comprehensive financial data, should not be revealed until a purchase agreement has been executed. Even so, supervising the buyer’s due diligence can assist you to preserve your data in case anything goes wrong.

Consuming the Purchase

There are many options for selling your company to a rival. Some may want to acquire your whole company. Others will want to acquire it in pieces, purchasing select important things and leave others behind. They could even want to acquire your company merely to shut it down and remove competition. A sale in parts may allow you to earn more than you would from the whole firm if you sold individual chunks off individually. Regardless of how you sell, it’s fairly unusual for the other company to want you to remain on as a consultant or to sign a non-compete agreement.

The Additional Business Option Selling to a complimentary firm is similar to selling to a rival. Consider adding linked organizations to your list of possible customers as part of your selling process. If you operate a catering company, the owner of a banquet hall may consider you as a particularly useful addition to his company. These sorts of transactions allow you to get the benefits of selling to a rival (immediate synergy) while avoiding some of the hazards.

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