While selling a business you own is not an easy task, selling it to a competitor is even more challenging. As a seller there are some additional obstacles you must be aware of if you are considering selling to a competing business. 

Getting a business valuation estimate is always an important first step in selling a business, no matter who the potential buyer is. It has added weight when selling to a competitor, because a competing company may try to get you to accept a low-ball offer. Knowing the market value of your business and how it compares to others within the same industry will give you a clear idea of how much you should sell your business for, and give you confidence in your asking price. An experienced business broker can help provide an accurate valuation based on numerous factors, both tangible and intangible. 

Always be cautious when dealing with a competitor who has interest in buying your business. They may not always be serious about buying it, and could just be faking interest to gain more knowledge about the inner workings of your company. If a competitor becomes aware of the sale, they can do serious damage to your business. This includes leaking the information to customers, suppliers and employees, all people who depend on your business for various reasons. Public knowledge of a sale can cause you to lose employees, cause vendors to become uneasy, or have your customer base poached by your competition.  

Listing your business for sale confidentially can protect it from the negative impact competition can have on it during the sale process. This is another good reason to hire a business broker. A broker can screen buyers to filter out competitors who are just fishing for information, and not serious about buying. They have all potential buyers sign a legally binding Non-Disclosure Agreement (NDA), and know the appropriate and strategic time to release sensitive information about your business. 

Whether you are attempting to sell a business on your own, or utilize the expertise of a business broker, do not proceed without taking a good-faith deposit and having your potential buyer sign an NDA. This prevents buyers from using your trade secrets to advance their business and ensures that they are serious about pursuing a sale. Even then, companies may behave dishonestly, so try to get a good read on the people you are dealing with and do your due diligence. Don’t be afraid to ask detailed questions about their intentions and plans for the future. Try to figure out if your business is a good fit for the buyer by asking them about what criteria is important to them. If you have nagging doubts about them, it may be a good idea to move on, and try to find another buyer. 

Being fully prepared to sell your business, with all of the necessary documents in order can help improve your chances of closing a successful deal. This is especially true if you have a competitor who is trying to decide between buying your business or another, similar one. Showing them that you have your financial statements organized and ready to disclose at any moment tells them that you are on top of things and running the business well. It also prevents them from having to wait on you and subsequently getting cold feet. 

You need to take charge of the sale of your business. Do not let a competing company, or any other interested buyer push you around. While they are making a big investment in buying your business and have the right to gather information about it before signing a purchase agreement, you need to make sure it happens on your terms and at your discretion. Tilting the circumstances in your favor becomes much easier when you hire a business broker to guide you through the transaction. They can negotiate on your behalf, decide when it is appropriate to release information about your business and dictate the pace and terms of the sale process. Their involvement also allows you to continue to run your business effectively, without dividing your time between your daily duties and buyer inquiries. At the end of the day, getting help is the best way to get through the process of selling your company to a competitor and getting the most you possibly can out of the sale. 

If you own a business in the Sarasota, Fort Myers or Naples metro areas, and are considering selling it to a competing company, or to anyone else, contact CIBB today. We are a business brokerage based in Southwest Florida that has been helping business owners negotiate sales on their own terms for over 30 years.