5 tips to Follow When Selling Your Business to a Competitor

As a business owner, there might come a time when you decide it’s time to sell. Whatever the reasoning behind your decision, it’s important to be prepared so you can get the most out of the sale as well as protect yourself from potential downfalls.

One of the easiest and most effective ways to sell your business is to sell to a competitor. This may tug on your heart strings, especially since you most likely spent the better part of your time as a business owner trying to separate yourself from the competition. However, business owners often find ready and willing buyers in the form of their competition, so it’s good to know what’s in store if you decide to go that route.

Follow these five tips if you decide to sell your business to a competitor:

1. Get an Appraisal

When you decide you want to sell your business to a competitor, you will often be the person who makes the first move. This means that more times than not, you will be the one approaching your competitor with the idea of the sale, and not the other way around.

In addition to inquiring as to why you want to sell, your competitor will likely ask one simple, straight-to-the-point question: How much? When this topic arises, it’s essential that you not only have a price in mind that you would accept, but that this is based on actual market research and not conjecture.

By getting an independent appraisal of your business, you will have true market research on your side that shows what your business is worth.

2. Don’t Be Emotional

Selling a business can be an emotional undertaking, but especially so if you’re selling to a competitor. As mentioned above, you’ve probably spent a good portion of your time as a business owner trying to separate yourself from your competition. As such, you may harbor some ill will toward this person.

Don’t let your past experiences, and the emotions tied to them, get in the way of making a good deal. Approach the potential sale in the same fashion you would if you were selling to a fan of yours – with an open mind and a complimentary tone of voice.

3. Be Careful with Information

While we’d like to think that every person has good intentions, that’s simply not true. Some competitors may tell you they’re interested in purchasing your business, when all they really want is information they can use against you to further their own business.

That’s why if you approach a competitor about selling your business, make sure you have them sign a confidentiality agreement before sharing specific information and insight into your business’ operations. You don’t want to pull back the curtain before you’re sure they are serious potential buyers.

4. Don’t Be Afraid to Ask for Direction

Just because you’re selling your business doesn’t mean the future is out of your hands. If you think the competitor who is interested in buying your business should do things a little differently, tell him or her that during the negotiations.

You might look to preserve a part of your legacy by having your competitor adopt a practice that you installed as part of your company. Communicate your desires and wishes up front, and your legacy could live on long after you’ve sold your business.

5. Don’t Forget About Your Business and Employees

This point goes hand-in-hand with the one above. Just because you’re selling your business does not mean you should forget about it altogether. This point is two-fold…

First, you need to continue to operate your business at the highest level possible, just in case the first deal you approach falls through.

Second, and most importantly, once a deal does look like it’s coming to fruition, you want to make sure that you’re not ignoring all the work you did to build your business to what it is right now. The last thing you want is for your business’ legacy to crumble once you sell to a competitor, and/or your employees to lose their job.

By following these five steps, you’ll be able to rest easier knowing you’re well prepared to sell your business to a competitor.

Talk to a Sunbelt South Florida broker today! Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs.

Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing, Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.