Many of small business owners get emails that start something like this:
“Have you thought about selling your company? I have a client who is interested in buying your company at a strategic value…”
Your first thought maybe to start to dream alittle; is now the time to sell my company for that big payday I have been waiting for? But wait, is this email even real or some kind of trick?
From my experience, many times it’s not what it seems. Typically these types of unsolicited offers come from:
- Competitors looking to gather market intelligence on your business.
- Entry level researchers at business brokers or investment bankers that are looking to sell your business for a fee.
- Consultants that want you to hire their company to “get it ready for sale”.
- Entrepreneurs trying to buy another company that have little capital and want to do it as part of owner financing.
That being said, this could be a real offer! So what do you do next?
- Research online who the person and the company is to access the proposal’s seriousness.
- Respond and ask: who is the buyer, what type of multiples have they paid in the past and are there any other similar transactions they have done. Ask what is their financial interest (and thus motivation) in the transaction.
Before you disclose anything about the company:
- Get some advice from a business broker that can represent you in the transaction to ask the hard questions.
- Have all parties sign a confidentiality agreement to protect anything you disclose.
- Never agree to be pressured into a time frame to sell your company or any other commitments without legal representation.
If this is a real offer and it is the right time to sell your business, you may want to hire a business broker to run a full-scale competitive process to find other buyers to get the highest price possible.
