Should You Sell Your Business to a Competitor?

Should You Sell Your Business to a Competitor | Anthony Caliendo | The Sales Assassin

You’ve succeeded in your dream: you have your own business. Some entrepreneurs want to build a business and keep it in the family by passing it down for the next generation to run. But other business owners, whether they have recently opened a business or have run the business for years, make the decision to sell their business.

There are many reasons owners decide to sell their business:

1. They aren’t able to make a profit running the business and decide to try something else.

2. They have a new opportunity and want to sell their business to fund their next venture.

3. They want to retire and need the income from selling their business to fund their retirement.

4. They like building a business – not running it.

5. Someone makes them an offer they can’t refuse.

Selling your business to a competitor can be a smart decision. Whether you want to sell and decide to approach a competitor or a competitor approaches you and offers to buy your business, it’s important that you conduct your due diligence so there are no surprises and that you are properly protected – particularly if you’re selling because you have to, not because you want to. Your business valuation will help ensure you understand what your business is worth, and an NDA will protect you in case a competitor is fishing for information about your business, and is not actually a serious buyer.

If you identify and approach competitors about your desire to sell your business or a competitor approaches you with a serious purchase offer, protecting your business must be central to all your negotiations. Despite the risks, selling your small business to a competitor has some serious advantages.

5 Benefits to Selling Your Business to a Competitor

1. Fast Sale
An offer to buy your business from a respected competitor can be a fast sale when two knowledgable parties approach the deal with transparency and respect.

2. New Business Opportunities
A business owner may want to be acquired by another business with more assets and financial resources. Some businesses are sold to a competitor and the seller then becomes part of the buyer’s organization and can continue to grow the business to greater success than they could do on their own.

3. Favorable Sales Price
If your business has good value and a competitive edge, a competitor may be willing to pay top price so it doesn’t fall in the hands of another competitor. A strategic purchase of a competing business can be the fastest way for a business to grow.

4. Secure Financing
A competitor who understands your business is likely to be more knowledgeable and successful in securing financing to make the purchase when compared to an industry outsider. A competitor has a financial history, professional reputation and business assets that make it easier to determine if he is a qualified buyer and then to get a loan to make the purchase.

5. Keep Your Business Alive
If you want your business to stay active and continue to serve your clientele, a competitor can be your safest strategy. If you know the business owner to offer a reputable service and an honest businessman, you have more assurance that your business is in capable hands and isn’t likely to run your business to the ground.

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