AMB Performance Group Blog

5 Tips for Selling a Business to a Competitor

Posted on: August 13, 2021
Business Growth

Choosing the right exit strategy for your business isn’t easy, but it’s an absolute must if you want your company to continue when you’re ready to move on.

The number one goal when starting a business should be setting it up in a way that it not only functions without the owner, but thrives.

If a business can’t function without the person who founded it, then there is no way it will ever be fit to be sold for any amount close to what it could be worth.

Many business owners like you want to know how to sell your business to a competitor as they begin to research the right exit strategy, and it’s more complex than you might imagine.

Consider All of Your Options: 

If you’re ready to sell, selling to a competitor is probably the natural choice. After all, they’re likely the most interested parties. There are some risks, though.

Make sure you’ve thought through all of your options before you decide to sell your business to a competitor. If you’re ready to sell, keep in mind that you don’t have to sell your entire business.

You could simply sell your assets, so you can free up some resources that are needed elsewhere. You may just want to liquidate your inventory or implement a new strategy.

Think carefully through your options and consider discussing them with a business mentor before you enter sales negotiations.

Make Sure Your Company Is Properly Valuated: 

If you decide you’re ready to sell, have a professional determine the worth of your company. It’s tough to set it just right.

The chances are good that you’ll either evaluate it too high or too low on your own. Hiring a professional appraiser, though, will help you understand exactly what your company is worth, and the process will produce quite a bit of documentation you can use during the sale itself as a negotiation tool.

Also, don’t forget to give yourself time to respond to the valuation.  There are always things that need to be done to increase the valuation so your best bet is to be working towards being sellable from day 1.

Consider an NDA: 

As soon as you’re ready to enter into negotiations with a competitor, have an NDA prepared for their signature.

That will not only help you make sure your business secrets remain a secret, but it can also help to protect your customer information throughout the process.

You’ll also want to wait until the purchase is finalized before you share any seriously sensitive data. That will help to protect your company and your customers further.

Learn More About Their Business Goals: 

Don’t hesitate to ask questions throughout the process. Find out more about what they most want. You want to protect your interests and get the best possible deal, so learn more about exactly how this purchase will help your competitor.

Understand whether they’re planning to expand, use the added assets to begin to dominate the vertical, or do something else entirely.

Don’t hesitate to consider your past relationship with your competitor here. It’s possible they just want to damage you and your brand, and in that case, the deal may not be the right way forward for your brand.

It’s also possible they only want to buy your company so they can shut it down, and that could hurt your customers and your employees. Understand what they hope to do through your questions so you can ensure this sale is suitable for the future of your brand.

Take All the Time You Need: 

In most cases, the sale of your business doesn’t have to be a fast process. Instead, you can take all of the time you need to get your things in order and ensure the numbers are right for you to make your exit. You’ve worked hard to build your business. Negotiate as long as you need to so you can ensure your legacy remains in place.

business valuation

To learn more about making your business more profitable so you can sell your business quickly when the time comes, consider working with AMB Performance Group. With the proper training, coaching, and events that can help you develop your business, we’re the ideal partner to help you move forward.

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