How to Sell Your Business to a Competitor
The letter of intent should include details about the structure of the business that buyers and sellers have already discussed and generally agreed upon. An example of this would be whether or not the buyer intends to employ the seller after the transaction. Something so simple. This is not something you want to negotiate in a letter of intent after it is received. There is a risk that a competitor will only use a sales negotiation to learn more about how your business works. In some cases, the competitor is not a serious buyer. To protect your interests, a broker can control the information you disclose during a trade. I can`t say it enough. You may think you know your competitor`s game plan, but until the sale is over, you don`t know. A confidentiality agreement ensures that your trade secrets remain secret. Wait until the purchase agreement is signed before sharing sensitive information such as financial data or customer lists.
Be sure to protect your business from an unscrupulous rival. Meredith Wood is the editor-in-chief at Fundera, an online small business lending marketplace that connects business owners with the best financing providers for their businesses. Prior to Fundera, Meredith was CCO at Funding Gates. Meredith is a resident financial advisor at the American Express OPEN Forum and a passionate business journalist. Their advice keeps popping up on sites like Yahoo!, Fox Business, Amex OPEN, AllBusiness and many more. If you have an extensive marketing campaign, there is hope that you will be able to get an accurate price from the competition in the market. However, if you only show your business to a few competitors, you`re at their mercy. With that in mind, it`s wise to get into the process and know what your business is actually worth.
Also, you may need to adjust your value based on the particular buyer. For example, if your business is worth “x” to an ordinary buyer, it may be worth “x + y” to a direct buyer who doesn`t have to cut prices by buying your business to compete with you or spend extra money on marketing to keep their customers. A sale, including due diligence, can really dominate a business owner`s time, attention, and energy. Make sure the business continues to operate throughout the sale. I`ve seen business owners get so involved in a sale that the business collapses, which eventually drives down the selling price. Similarly, corporate culture must be embedded in a statement of intent. We talked about employees a minute ago, but corporate culture has a lot to do with employees – whether that culture continues after graduation or is fundamentally denied. And I`m talking about the culture of the sales company. When another buyer, especially a strategic buyer, enters and buys a business, the culture may not match at all. And this should obviously be checked before arriving at the letter of intent. But by dealing with the most important employees and how they are treated after closing. And I`m talking about how not only the next day, but weeks and years later can really make a big difference to the long-term success of an acquisition.
One of the really important ways to achieve this is to be very clear in the letter of intent whether or not turnkey employees are being questioned by the potential buyer, and if so, when. Because it can be a real point of contention with a lot of friction. There is a lot of fear for key employees and all employees in general. And most importantly, key employees. If they have employment contracts or if they will remain bonus plans when they are in place and what it will look like in terms of transaction. All of this is really very important. And just as importantly, good NDAs prevent buyers from doing things like: recruiting the company owner`s employees or their customers or suppliers. And even in certain circumstances, some professional advisors. Finally, this protection must be available to a seller during and after the completion of the acquisition process.
If you have not hired a business broker or transaction lawyer to handle the confidentiality agreement and NDA, it is your responsibility as a business owner to ensure that this is implemented. Most business owners use confidentiality agreements or confidentiality agreements in their daily work. Although this is said, I have met some who have not. One of the things we`re going to talk about here is the potential buyer. .
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