There are a number of variables to consider when selling a business. The price is not the only thing variable to consider when selling a business. If a seller is to achieve the most optimal results, there are other variables to consider.
Selling to a Competitor
Selling to a competitor is an attractive idea to many business owners. A competitor has an advantage of understanding the business. Therefore, they can understand the value of the business better than an outsider. Although this point is valid, it comes with its own problems. A seller has to disclose a lot of confidential information. This could prove to be risky if the deal were to fall apart.
Selling to a Financial Buyer
Usually a financial buyer is not a competitor. A financial buyer may be unwilling to pay the seller’s price. It is important to remember that the intention of a financial buyer is to purchase the business and sell it for a profit within a few years.
Selling to a Strategic Acquirer
The highest selling price may come from a strategic acquirer. However, this doesn’t mean selling to a strategic acquirer is the most sensible course of action for a seller. A strategic acquirer may not have the best interests of the company at heart. It is not uncommon for this type of buyer to replace key employees and management when they take ownership. The company may even be moved.
There are other potential buyers who may be the optimal fit for a given business. Matching the right buyer with the right business is both a science and an art. Working with the right M&A advisor can open up a range of new avenues and help a seller reach the kind of buyer that is as close as possible to the perfect fit.