How to Sell Your Business to a Competitor

Are you planning to retire in the business industry or pursue other business opportunities in a different industry? Or maybe you may have reached that decision in which you sell your business permanently. No matter what your reason is, it is indeed possible that the highest bidder and best buyer your establishment can get is your competitor. If that is the case, Transworld Business Advisors has a few tips that might benefit you and your business.
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Are you planning to retire in the business industry or pursue other business opportunities in a different industry? Or maybe you may have reached that decision in which you sell your business permanently. No matter what your reason is, it is indeed possible that the highest bidder and best buyer your establishment can get is your competitor. If that is the case, Transworld Business Advisors has a few tips that might benefit you and your business.

1. Ask for a Non-Disclosure Agreement

During a sale, a competitor could gain access to secrets and confidential information. With a non-disclosure agreement (NDA) they cannot use your trade secrets to grow their business should the sale fall through.

2. Get a Deal Signed before Due Diligence

Once negotiations have begun with your potential buyer, an accepted offer ensures the buyer is really planning to buy your business and make a deal at terms that are acceptable by you. It can also lay out what information will be available and when it will be disclosed. Some information, like customer lists, can even be post-closing. It depends on the plans between the owner and the buyer!

3. Don’t Get Emotional, but Be Cautious

At the end of the selling of your business, your competitor could become your best friend. Although you are business rivals, there is no reason to let natural distrust sour the deal. If your business competitor is really into buying your establishment, then why not give it a go? Just always be sure to proceed with caution and limitations. You can never be too careful with a potential competitor buyer who might not be a serious buyer and only trying to gain a competitive advantage right? Study him and do some background check about the buyer and his lifestyle. In that way, you will be able to know him and his plans.

4. Get All the Answers

When a competitor has reached the news that you are selling your business, confidentiality is critical. You must come to realize that you are within your rights to ask why they are interested in starting negotiations and what they plan to do with the business once they have ownership.

5. Make sure that you are not losing your Focus

During talks, make sure that you are not afraid to ask for what you want. For instance, you may wish to the price of your business to be higher, instead of payments over time. Similarly, you may want to protect your employees and demand severance packages in case of layoffs. In the same way that you might have specific demands in a contract for a non-competitive buyer, you must outline your priorities when selling to a competitor.
Transworld Business Advisors is familiar with all kinds of buyer-seller relationships. Highly skilled in non-disclosure agreements, confidentiality, and business negotiations, your advisor will be equipped to help you enter a business deal with all parties getting the respect and result desired.
Selling to a competitor may seem like a tough pill to swallow, but an advisor will ensure there are no surprises along the way. Call your local Transworld Business Advisors office to chat with a broker about your next business sale!

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