{"id":560625,"date":"2012-06-27T03:49:42","date_gmt":"2012-06-27T07:49:42","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/a-sellers-dilemma\/"},"modified":"2022-01-31T12:44:38","modified_gmt":"2022-01-31T17:44:38","slug":"a-sellers-dilemma","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/a-sellers-dilemma\/","title":{"rendered":"A Seller’s Dilemma"},"content":{"rendered":"
\n

When one sells their house, the best deal is usually the highest price.\u00a0 When one decides to sell their business, there may be other factors to consider.\u00a0 Many buyers are similar to the \u201coverlooked\u201d buyer described below, serious and qualified; and most sales of businesses are win-win transactions.\u00a0 However, there are a few exceptions, and sellers should consider them carefully, balancing their prerequisites to the goals of the buyer.<\/p>\n

Selling to a Competitor<\/strong><\/b> \u2013 Many company owners think this is the best way to go.\u00a0 They read about the mega-mergers such as Bank of America and Fleet bank, or the pending deals such as Federated and the May Company Department Stores, and U.S. Air and American West.\u00a0 Consolidation may play a major role in large public companies; this is not the case in middle market companies.<\/p>\n

Many owners of middle market firms look at these mega-deals and think it might work for them.\u00a0 However, upon further consideration, they realize that by disclosing a lot of confidential information to a competitor, their business could suffer irreparable damage if the deal would fall apart \u2013 and many do.<\/p>\n

Selling to a Strategic Acquirer <\/strong><\/b>\u2013 This may bring the highest price, but there are several reasons why this may not be in the company\u2019s best interest.\u00a0 Many owners have worked with key employees for years and would not like to see them replaced. The strategic owner might not only replace members of management, but might also move the company to another part of the country.<\/p>\n

Selling to a Financial Buyer <\/strong><\/b>\u2013 This buyer may not be willing to pay the seller\u2019s price and is usually buying a company with intentions of selling it at a profit in three to five years.\u00a0 This leaves the company and its employees in limbo waiting for a new owner to take over.<\/p>\n

Other Buyers<\/strong><\/b> \u2013 The employees may decide to buy the company (ESOP).\u00a0 However, this usually means a long-term payout for the owner. An individual buyer may come along such as a Warren Buffett, but what are the chances?\u00a0 A key member or members of management might decide to purchase the company, but generally they won\u2019t pay the price.\u00a0 If a sale is not consummated, the key management member(s) will most likely leave.<\/p>\n

The \u201cOverlooked\u201d Buyer<\/strong> <\/b>\u2013 There are many individuals who want to own their own company.\u00a0 They might be former executives of major companies who want to do something on their own. Some buyers have access to large amounts of investment capital. There are many qualified individual buyers in the market place. Russ Robb, the editor of a leading M& A newsletter, M&A Today<\/em>, has written a book, Buying Your Own Business<\/em>, for those individuals interested in buying their own company. This book has sold over 20,000 copies, which indicates the large number of people who are interested in buying a company.<\/p>\n

There Is No Magic Answer<\/strong><\/b> \u2013 Selling a company comes with no guarantees.\u00a0\u00a0 When Badger Meter Company, a public company headquartered in Milwaukee, acquired Data Industrial Corporation based in Mattapoisett, Massachusetts, this appeared to be a marriage made in heaven.\u00a0 Their respective product lines fit like a glove, their corporate cultures seemed compatible, and sales expansion by cross-selling was evident.<\/p>\n

This strategic acquisition would have been fine except for one change.\u00a0 The parent company moved Data Industrial’s operation to Kansas, and every employee’s job was terminated.\u00a0 However, one should not construe that all acquisitions by strategic or competitive acquirers end up in a similar fate.\u00a0 Furthermore, for price considerations, the seller can draft restrictions in the Purchase & Sale agreement to prevent the transfer of the business, at least for a specified time period.<\/p>\n

Certainly selling to the overlooked type buyer doesn\u2019t guarantee all of the seller\u2019s concerns, but knowing the interests of some of the various buyer types can help insure that the goals of both buyer and seller are met.\u00a0 Sellers should determine their goals prior to attempting to sell their business.\u00a0 A consultation with a professional intermediary is a good start to this process.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

When one sells their house, the best deal is usually the highest price.\u00a0 When one decides to sell their business, there may be other factors to consider.\u00a0 Many buyers are similar to the \u201coverlooked\u201d buyer described below, serious and qualified; and most sales of businesses are win-win transactions.\u00a0 However, there are a few exceptions, and […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-560625","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560625","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=560625"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/560625\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=560625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=560625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=560625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}