Yes, it is possible to sell to a business competitor. Selling to a competitor is different than selling to a buyer who is completely new to the industry. Do not treat these two types of buyers the same way. There are various differing variables.
A Competitor Can Be A Great Buyer
A competitor usually has an excellent understanding of how your business and industry works. They usually enter the negotiation process already understanding the value of your business. This can serve to speed up the process.
Proceed With Caution
Approach competitors carefully. Do not share sensitive information like client lists and other “secrets” until the sale is complete and the money is in the bank.
A business broker is an important person to have on your side, especially when you sell to a business competitor. A broker can help to ensure that you don’t reveal too much prized information until the sale is 100% complete.
Negotiate From A Place Of Knowledge
A business broker understands how much your business is worth and can back up that valuation. It is important that you have this information before discussing a potential sale with a competitor.
Be Prepared To Accept Certain Legal Conditions
Your competitor may ask for you to stay on as a consultant after acquiring your business. They may also ask you to sign a non-compete contract. This makes perfect sense. Tapping your expertise is a wise move for your former competitor. Also, wouldn’t you want to make sure that the competitor didn’t simply “set up shop” somewhere else in a few months or years later?
Selling your business to a competitor is a potentially good move, but explore it with extreme caution. Never divulge critical information to your competitor until the deal is final.