Selling a business has a lot to do with which industry you're in. Finding a buyer tends to be easier if you own a tech startup than if you own a manufacturing company. The laws of supply and demand simply aren't in your favor if your company isn't trendy. That doesn't mean you can't sell your business, it just means you're going to have to work at making your business an attractive investment. You’re going to need a plan and some well-connected people in your corner.
We’ve said this many times before, but it bears repeating. Get help and plan ahead. Find representation who can help you sell your business, can tell you what you need to do to prepare for a sale and can approach potential buyers on your behalf. You can’t control the future, but a solid plan and good representation will set you up to sell for a price that will send you off happily into retirement.
The Risks of Competitive Selling
One of your most likely buyers is going to be the strategic buyer, someone who’s interested in your business because it gives them a competitive edge. Whenever you entertain the idea of selling to your competition, you take a calculated risk. It’s not unheard of for a competitor to show interest in buying only to get an inside look at your operations. That doesn't mean you should ignore every strategic buyer who comes along, it just means you need to take some precautions.
First and foremost, find a representative who works with single investors and understands who is interested in buying your business. This will go a long way in weeding out people without a serious interest in purchasing your company.
Second, set yourself up to keep some things close to your chest during the sales process. A potential buyer needs enough information to honestly assess your business. This doesn't mean they need access to everything under your roof. Provide just enough information and no more. For example, a buyer needs to know about your customers, but I’ve seen companies hand over customer lists without any names, just revenue distribution. I’ve also seen companies limit who a potential buyer gets to talk to. None of their top people were accessible until after all the papers had been signed and the sale closed. I’ve even seen a company require a steep, non-refundable deposit, scaring away anybody who just wanted a peek inside.
Ultimately, limiting your risk is going to come down to having a good representative in your corner. Ask your advisors for referrals and take the time to find someone with a solid reputation and an excellent track record.
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