One of the conversations we have with new clients or potential clients early on is to discuss the range of likely buyers for their business. We ask them for their insight and it is usually very helpful. We talk about all of the kinds of potential buyers – competitors, suppliers, customers, national companies, companies serving a neighboring geographic area and so forth. Oftentimes, this conversation leads to who they do not want to sell their business to. I find this to be a very interesting topic.
Why would someone trying to sell his or her business rule out a qualified potential buyer before even engaging in a dialogue? The answer usually lies in the highly competitive nature of the green industry. It is really hard to switch gears from being a fierce competitor to considering a business sale. A business owner may have built his entire marketing strategy around competing with a larger rival, pointing out the negatives of dealing with a larger corporate business. Whether or not you do at first, eventually, you probably will believe your own pitch that you offer a personalized level of service that a large corporation just cannot provide. You want the best for your customers. You want the best for your employees. Naturally, you want to sell your business to someone just like you.
If you really want to sell your business at the best price with the best terms, it is best not to limit the possibilities. Oftentimes, the large corporate entity is the only game in town when it comes to a potential acquisition – or at least may be willing and able to pay the best price because of synergies they project to realize (cash flow enhancements from additional revenue or cost reductions). In addition, this type of buyer usually has its financing in place making it possible to complete a transaction in much less time.
Believe it or not, such a transaction may be desirable for your customers and employees too. I don’t hold any illusions that large companies always offer the best service or anything like that. But a large company is definitely not interested in buying your business for the purpose of running off your customers. In most cases, they will be very interested in working with you to develop a strategy for retaining as many of them as possible. They may actually be interested in acquiring your business for the purpose of IMPROVING their service to customers in the area, giving a special opportunity for your employees. As difficult as it is to recruit and retain good employees these days, there is a very good chance that your employees are one of the assets of your business the acquiring company is most interested in. And of course, there may be some advantages to your employees when they become employed by a larger organization, especially in terms of benefits, a powerful motivator for many employees.
So before you answer the question about who you don’t want to sell your business to, be sure to ask yourself how important it is actually sell your business at the best price on the best terms and challenge your preconceptions about a sale to a competitor. It is possible you will discover that the competitor you dread selling to may be the best buyer – for all concerned.
—Ron Edmonds