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How to respond when someone wants to buy your business

Posted by Tasnim Ahmed

January 18, 2021

How-to-respond-when-someone-offers-to-buy-your-business

Business owners and entrepreneurs are always looking for opportunities, whether that means entering a new field or cashing out of one. Most of the time, serial entrepreneurs tend to make something from scratch, develop it through its nascent stage, and when it matures and does well on its own, they sell it.

However, if and when the opportunity arises and you get an offer for your business, how would you know if it’s the correct price, or even is it the right time to let it go? Below are a few tips for every business owner on what to do when an unsolicited offer arrives.

Does the buyer know your business?

When faced with an offer, the first thing you should do is gauge whether the buyer really knows your business. Are they one of your competitors? Are they from a relevant industry? Could they be trying to broaden their portfolio? Is it some kind of investor who is trying to solicit a number of companies, and observing which one takes the bait for them to park their capital? All these answers have to be answered by you, because they have a direct relation to how much you should counterbid, or whether you should refuse the offer outright.

Is the individual among the best?

It’s likely that you are the best thing that could ever happened to your business. However, if it has to go into new hands, you want it to be with the best possible new owner. Is the individual or business who wants to buy your business up to it? Are they from the same industry? Are they good at what they do? Are they a strategic fit for your business, or is your business a strategic fit for them? This last part is very integral, as this will determine how much synergy will come from the new alliance.

Talk to us about how our outsourced services can help your startup grow in value.

Are you getting top dollar?

When you receive an offer, whether it’s your first or your fiftieth, always make sure you are getting the full valuation that you think is appropriate for your business. Simply negotiating with a random one-off buyer can have disastrous effects, and could cause your company to be undervalued. Make sure they know your business, your reputation and what they are buying into before you start negotiating.

Do you want to sell?

Just because someone comes knocking on your door does not mean you have to sell. Avoid any sudden, knee-jerk reactions. If someone gives you an offer today, it doesn’t mean you won’t get one in the future. Always remember that it’s your hard work that has made the company what it is, and got you an offer from someone who has realized the worth of what you have built. Chances are they won’t be the last. Calculate your risks, plan your future, and if your exit makes sense, then take it — but only when you are ready to do so.

You decide to sell: What next?

So, you’ve made a decision to sell. You need to consider what the new future looks like for your company. Are you looking at 100 percent dissolution? Could it lead to staff layoffs and technology infusions? Are you looking for a partner, or a background role for yourself? You'll need to answer all these questions, and you also need to consider the other players in the firm who might have similar questions. Your colleagues and staff members will have questions about the change and you’ll need to be prepared to answer them.

M&A does not typically involve a random person coming to your driveway to give you money for your business. It’s a tricky and complicated part of owning a business that can yield great dividends for you, and you need to play it well after gauging all the possibilities for yourself.

Want more?

Escalon can help ensure that your accounting, financial records and taxes are accurately done and that they communicate the full value of your business to potential buyers. Talk to an expert today.

Authors

Tasnim Ahmed

Tasnim Ahmed is a content writer at Escalon Business Services who enjoys writing on a multitude of subjects that include finops, peopleops, risk management, entrepreneurship, VC and startup culture. Based in Delhi NCR, she previously contributed to ANI, Qatar Tribune, Marhaba, Havas Worldwide, and curated content for top-notch brands in the PR sphere. On weekends, she loves to explore the city on a motorcycle and binge watch new OTT releases with a plateful of piping hot dumplings!

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How to respond when someone wants to buy your business

Does the buyer know your business?

Is the individual among the best?

Are you getting top dollar?

Do you want to sell?

You decide to sell: What next?

Want more?

Authors

Tasnim Ahmed

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