So here’s a scenario – you’re busy working away at your business and the phone rings. It’s your biggest competitor and they tell you that they would like to buy your business.
For some business owners, this sounds like a perfect scenario – they have been thinking about selling their business for quite a while, and they finally have an opportunity to complete this ambition. Better yet, the opportunity has come to them!
For others, the idea of selling their business may have never entered their mind.
Regardless of your position, if you are approached on an unsolicited basis by someone wishing to buy your business, you should think carefully about the steps that you take immediately after receiving this approach. This article outlines a few steps that you should take if someone approaches you to buy your business.
Step One: Think First Before Committing
Too often, particularly if business owners have been thinking of selling their business for some time, it can be easy to jump when an interested buyer contacts them with an interest in buying their business. If this happens to you however, a more thoughtful and measured response is normally in your best interests.
Regardless of whether you would like to sell your business or not, it’s often worthwhile to respond to an approach from an interested buyer by stating something like, “we may be interested, however we will need to give this further thought and come back to you.” This will enable you to give more thought to whether or not you would like to sell your business, and also ensures a buyer will not gain the impression that you are too eager to sell.
Step Two: Confidentiality is Key
More often than not, it is competitors and similar businesses that approach one another on an unsolicited basis to buy. Because of this, you need to be ultra careful about what information you disclose to these unsolicited buyers.
There are no guarantees that the sale of your business will occur, despite the promising nature of an approach from an interested buyer and it is important that you do not damage your business’ competitive prospects if the potential sale falls through.
As a starting point, it is vital that you put in place confidentiality terms between you and the interested buyer – these should be designed to ensure the interested business buyer does not mis-use any information provided to them as part of any due diligence that they may undertake.
From here, it is vital still to release information in a slow and controlled manner. Start by releasing only enough information to enable the interested buyer to make an offer. That way, if the offer is not consistent with your desires you can walk away without the interested buyer finding out everything about your business and how it operates.
Step Three: Seek Out Advice
If you receive an unsolicited approach to buy your business, it is in your best interests to seek out advice that protects your interests and ensures if you do proceed to complete a sale of your business, that it is done on terms which are beneficial to you. Start by talking to your accountant – they normally know you and your business well. Thereafter, your accountant may decide to refer you to a transaction advisor who can guide you through the intricacies of negotiating a sale of your business that will work for you and your long term plans.
Find Out More
Groves & Partners are expert business sale advisors, with significant experience in acting for clients who have received unsolicited approaches to buy their businesses.