Seller FAQ

How to sell your business to a competitor?

The thought of selling your business to a competitor can seem daunting. However, it is not uncommon and certainly not impossible. There are 6 major tips for successfully doing so.

  1. Do not turn over confidential information too soon

A nondisclosure agreement (NDA) is critical during any sale but especially when selling to a competitor. A potential buyer should never have access to trade secrets and other confidential information until the right time.  When a competitor shows interest, request an NDA be signed, in addition to having them work through an intermediary.

  1. The best advice is to hire an intermediary 

An experienced broker, such as Transworld Business Advisors, to help navigate a very tricky sale fraught with danger to a competitor.   You will need an attorney as well to make sure the business sale has the proper structure and protections throughout the process.

  1. Determine your business’s value

The first step to selling your business to anyone is determining your business’s worth. Once you have done so, you can choose a listing price that is both competitive and within market standards. When selling to a competitor, they will likely know what fair and competitive pricing is, therefore they may not be the best buyer in the end as they may not need all of your assets you have to sell.  

  1. Remove emotion from the equation

Essentially, do not let instinctive distrust interfere with a potentially successful business deal. If the sale goes through, someone who was once your competitor could become your best friend in business.

  1. Do not hesitate to ask questions

There is no harm or unprofessionalism in asking all of your questions. For one, it is completely reasonable to wonder where their true interest lies. Are they hoping to expand their existing business? What are their plans for your business? Before you sign on the dotted line, it is still your company and what happens to it is your business.

  1. Do not lose focus on your business and employees

Any deal and its corresponding negotiations can take much of your time, do not lose sight of what is critically important - your business and employees. A company is only as valuable as its latest earnings, which means it requires your attention to continue driving up revenue.

Do you have more questions?