How to Sell Your Business to a Competitor

How to Sell Your Business to a Competitor

Selling your business to a competitor is not an easy decision. Perhaps you’ve hit a rough patch and want to sell while you can, or maybe you’re just ready to move on to something bigger and better. One of the quickest ways to sell your business, regardless of reason, is to consider selling to one of your competitors. While it may seem unconventional to sell to your competition, it often offers unique opportunities. 

Every business has a variety of different competitors. They can be direct competitors, or those businesses that sell to the same kinds of customers and markets. They can be indirect competitors, or businesses that share just a little bit of customers and markets with you. Or, they can be near competitors, or businesses that cater to different customers and markets than you. Even though there are advantages to selling to competitors, you must always approach these kinds of sales cautiously. 

If your business isn’t doing well and you’re looking to sell, your competition could be one of the main reasons. Why, then, might you consider selling to them? In all honesty, this kind of sale in this situation is often the fastest and easiest way to make it happen. It’s a convenient sale because, as explained above, your competitors are most likely direct or indirect competitors, making their customer base the same or similar to yours. And, with your business’s already established customer support, this kind of sale offers your competitors a chance to buy your business and gain those loyal customers as well. Because of these reasons, there aren’t many other buyers that can offer the same kinds of advantages. However, you must still approach selling to your competitors with caution, as not all buyers have good intentions. 

There are always risks associated with selling your business to a competitor. One of the most significant risks is when your competitor makes an information request. An information request asks for the specifics regarding your business such as employee information, company patents, or even names of particular customers. This kind of information is particularly important for your own business needs, but especially to the eyes of a competitor just looking for information without real intention of buying your business from you. 

With these things in mind, it’s important to consider all of your options as well as weigh the pros, cons, and associated risks that come with selling to a competitor. Be sure you go into negotiations asking the right questions! Make sure that this sale will be just as lucrative for you as it will your buyer/competitor. Your questions should give a clear outline of how the transaction would look and what would take place if the sale went through. 

So, what questions should you ask yourself prior to selling to a competitor?

  1. You should consider the realities of the industry you’re in. Does that industry make it worth selling to a competitor? Would it be the most beneficial move to sell to a competitor considering the needs and wants of your customer base?
  2. How big or small is my business? How does it compare to that of my competitor and what advantages does the sale offer?
  3. What kind of relationship do I have with the competitor? This helps you think about their intentions and weigh the risks of selling.  

Once you’ve asked yourself these questions, contact our brokerage agents at Liberty Group of Nevada! We have dedicated staff that will walk you through the selling process!

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