Business owners often get unsolicited requests to sell their business. There are several options to consider and it’s important to contemplate your personal and professional goals when responding.
First, ask yourself a few qualifying questions: Where do you see yourself in the next 3-5 years? Is your company really ready for a sale? If there are other partners in the business, are they on-board to sell and do you need them for a majority decision?
Below are the three most common options to take when approached by a potential buyer.
Option 1: Retain some equity bringing in a majority partner to share in the ownership and growth of your business.
Benefits: reduced personal risk in the business, professional experience, added relationships, additional capital, and new advisors/board members
Drawbacks: loss of control, reduction of upside potential, and taking on an employee role after being an owner
Option 2: Walk away from the business and find something else that excites you. A sale will typically require some transition support period, but by selling you get to put an exit strategy into place.
Benefits: fully monetize the business you’ve created, retirement
Drawbacks: lost business benefits
Option 3: Do nothing and continue running the business as you planned
Benefits: maintain ownership/control
Drawbacks: no additional industry or capital resources for growth
Things you shouldn’t do:
When a buyer comes calling, be careful about what you disclose. You’re in the driver seat – ask questions to help you vet whether they are a true, qualified buyer. Don’t waste your time with tire kickers. There are always competitors out there trying to see if their contemporaries are for sale so they can get an edge in the market – with no real desire to buy the company. Keep your detailed financial information, competitive advantages, customer list and key employee info close to the vest until you’re sure it’s a good fit. As a private business your financials, employees, and how you run your business should not be public knowledge. Keep your radar up and only move forward with buyers who check all the boxes for your ideal strategy.
<span 1.6em;"="">And if you want to get the most money for your business, consider a formal auction process where you get multiple offers in tight timeframe so you can get the best price and terms in a competitive market.
For more information on running a competitive auction process, feel free to call us: 704-295-0102.