The oldest and most common would be to sell to someone you already know or that works for your company. However, the problem with this method is that most of the time it offers a fairly limited field of possible candidates and can severely impact the value you will receive for your business. And, if you approach someone within the company, you run the risk of alienating a key employee if the transaction is not consummated or facing premature disclosure of your intentions to sell your company.
The next most common option would be to attempt to sell your company to a supplier or competitor that you currently do business with. Here, you face some difficult issues once again. To begin with, if you target one of your Key Suppliers, you run the risk of spooking your supplier and face a possible credit reduction or withdrawal or simply less attention than in the past as the supplier no longer sees you as a long-term asset. Now, instead of a Supplier, how about a Competitor? Here your biggest risk is that your competition is now aware of your plans and may determine a better avenue than purchasing your company would be to aggressively pursue your key employees or customers by letting your interest in selling come to light. Even if that doesn’t happen, you will need to disclose a significant amount of information about your business which could have a serious impact on your competitiveness should a transaction not be completed.
Excluding Suppliers and Competitors, who else falls within your regular sphere of contact? Well, there is always your customer base to consider. Obviously, vertical integration is a hallmark of business development and one of your larger Customers may very well have such an interest. However, here you face the risk of seriously impacting an important facet of your business and possibly, once again, negatively impacting the company’s value.
Then there is the simple process of placing an advertisement in either the local paper or a national publication like the Wall Street Journal. But, first you need to figure out what to say in the ad and then determine where to place the ad. After that, you will need to figure out how you will handle any response you receive from your ad. Just the time involved in following up with potential acquirers can be daunting. And, on top of that, you need to determine how you are going to perform the initial vetting of the potential buyer to how much information to disclose to the possible justification of the company’s value while, at the same time, keeping the process as confidential as possible. From all perspectives, it is a complex process.
Lastly, you can always hire a third party to sell your company. The biggest issues that come into play here are potential up-front fees by the larger, more sophisticated firms along with the significant commissions and fees to be paid should a transaction be consummated. Not to mention you will be entering into a contract and will have a commitment both from a time standpoint and possibly an obligation to consummate a transaction or pay a fee to not move forward. And, along the way you are going to have to educate your experts on the various aspects of your company so they can then hopefully educate potential buyers about the most viable aspects of your company.