Competitors for your already-established business can make great buyers. By purchasing your business, competitors will be able to gain immediate benefits. They already have the manpower and expertise to run your business. In most occasions, all they would require would be a slight change in the branding of your business, and they would be all set. In Western Australia, competition might be fierce, and you may want to sell your business while you are still at a profit. Alternatively, you may be retiring and need to sell your business.
Whatever the reason is, the following tips can help you get a great deal on how to sell a business.
Protect Yourself
Protecting your interests and your business is very important as you undertake the process of your business’s sale. The interested competition that seeks to buy your business may just want to look through your accounting records and other forms of proprietary data as part of their market research. Furthermore, they may want to maximize upon the sale and seek to buy your business at a very low price. Involve a lawyer even in the initial parts of your sale for these reasons. This inclusion will lead to the signing of a confidentiality agreement between both parties. Do not release any data on employees, strategies and future projections until you have a signed purchase agreement in place. Even then, handle information on your business privately and meticulously.
Identify Your Competition
This involves listing down possible businesses that may want to buy your own. The businesses do not have to be directly involved in the specific field that you participate in. They do not necessarily need to serve the same clientele, either. It all comes down to demand. List down businesses that would want to own yours. Further, also consider businesses that serve in related fields to whom it would be an added advantage to own your business.
Value Your Business
This tip cannot be overemphasized. Business valuation goes beyond just a number. It will also help you to know and understand the impact your business’ value makes in the market. With business valuation, you will go to prospective buyers knowing fully well the value of your business. This will prevent you from selling the business at a disadvantageous price. Additionally, the price of your business may vary depending on the buyer. Your business may be of initial value to a buyer in a related field. However, the business’ value could increase if being sold to a direct competitor who, by buying your business, will not require to make discounts on purchases or offer as many sales within the year.
Make The Sale
You may sell your business in a variety of ways. You could sell the entire organization at once or could sell certain parts of the business piece by piece. Selling piece by piece could lead you to sell at a higher value than you would have sold the whole organization and thus realize a higher profit. A sale in this manner would require a more specific business valuation. However, you sell, ensure that all the required paperwork is ready and has been seen by a lawyer.
We hope these tips on how to sell a business to a competitor are of assistance. Whether the process of sale is bitter or sweet, ensure to get it right and get value for your money.
Mathieu Paul
Director – Business Improvement
P: +618 6315 2700
E: enquiries@insightcp.com.au
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
Liability Limited by a scheme approved under Professional Standards Legislation
Reference Links:
https://smallbusiness.chron.com/sell-business-competitor-73118.html
https://businesssalesperth.com.au/thinking-selling-business-western-australia-tips-perths-leading-business-brokers/
https://investmentbank.com/selling-your-business-to-a-competitor/
https://www.inc.com/chirag-kulkarni/5-benefits-of-getting-a-business-valuation.html
