It Could Happen At Any Time
Whether selling your business is on your radar or not, an offer can come at any time. That’s because profitable companies constantly seek aggressive expansion. Luring smaller fish with big offers is part of their strategy.
So, if you are discreetly approached with an unexpected acquisition offer, the first thing you will probably need to do is get over the shock.
Instead of panicking, try to remain cool, calm, and collected. The easiest way to keep your wits about you is to be prepared for unexpected offers. Think about the ideal scenario for transitioning from your business in the future.
Here are some other tips to consider.
Assess your emotional readiness.
Emotional readiness is a key part of selling a business, and often takes at least two years of preparation. Being emotionally unprepared leads to quick, irrational, regrettable decisions.
To keep your emotions in check during the sales process, talk to a post-transition specialist, or personal coach, long before you ever consider selling your business. That way you can respond to an unexpected offer with a clear head.
Realize the person making the offer is serious.
Even if you weren’t considering selling, take the buyer’s offer seriously and listen to everything they have to say. You might be pleasantly surprised with what you hear.
In today’s market, high quality businesses are few and far between. Buyers aren’t looking for a bargain price on a mediocre company that they can improve. It’s quality first, price second.
If you are approached by a buyer, it means your business is among the cream of the crop. Don’t second-guess yourself or the offer.
Get a valuation.
The best way to separate a quality offer from a lowball offer is to order a business valuation. If you’re turned off by the high cost of an appraisal, rest easy. In most cases, an affordable basic business valuation is all you need. It will allow you to create a realistic five-year projection for you and your potential buyer.
Of course, the basic business appraisal won’t always mirror the final price tag of your business. While non-strategic buyers focus more intensely on the numbers, a strategic buyer looks at the bigger, synergistic picture and sees growth potential you might not yet have considered.
Be realistic.
Don’t let an offer go to your head. I know it’s flattering to receive unexpected interest in your company, but you must remain realistic.
Too many business owners set their sale price based on what they need, rather than their company’s actual worth. If you hold on too tightly to unrealistic expectations, you could squeeze the life out of an otherwise fair deal.
Don’t burn bridges.
At the end of the day, you might not be prepared to sell. Nothing’s wrong with that! Just make sure that when you and your suitor part ways, you do so on good terms. You want to sustain your reputation for future offers.
For example, I worked with an owner who had been approached about an acquisition several times over four years. Even though he wasn’t prepared to sell, he always left the negotiating table on good terms. So the offers kept flowing.
When he received another offer in the fifth year, it was his biggest one yet. And he felt emotionally ready to sell. Diligence, patience, and civility paid off.
You never know when an acquisition offer will come your way. It’s better to be prepared for the possibility so you can make a sensible and potentially profitable decision instead of acting rashly in the heat of the moment.
If you want to prepare for possible offers, give me a call at 561-543-2323. I will explain why selling a business alone is nearly impossible these days – especially if you want to receive an offer that is ideal for you, your family, your employees, and the future of the business you built. I can recommend experienced sell-side attorneys, tax specialists, estate planners and industry experts who can lead you in the right direction.
While surrounding yourself with experts might seem like a costly upfront expense, they can point out potentially expensive details during negotiations that you might otherwise have overlooked. Hiring experts is a sound investment that will pay off in the end.
For more information about mistakes that occur when selling a business, download our free guide, Code Red: 12 Seller Mistakes so that you’ll always ready to entertain an offer.