One way that a small business can become a big business is by being acquired. Maybe your business plan has always been to sell, or maybe it has never occurred to you.
But if you find yourself being wooed by a potential suitor interested in buying your business, John Warrillow at Forbes.com has some advice to make sure you don’t blow it.
No harm, no foul
He says that, whether or not you are ready to sell your business, there is no harm in meeting with a potential buyer. Even if you don’t think you’d like to sell at the moment, the meeting could be useful for gaining “competitive intelligence” that could help you negotiate later.
For the most part there’s not much too lose and much to gain from meeting with a potential buyer, but Warrillow does warn against a few rookie mistakes.
First of all, he says, like a teen hoping for a second date, it’s important not to appear too “eager.”
Even if you’re desperate to hand over the business, play it cool, and insist that your company is not for sale, but that you are willing to meet for “a strategic discussion.”
During said discussion, “let them do 95 percent of the talking.” Warrillow suggests writing out and rehearsing a list of questions so that you can control the conversation and get more information out of your suitor than they get out of you.
Part of holding your cards close to your chest includes refusing to name a price.
No matter how much they insist, hold true to your claim that the business is not for sale, and don’t give them even an estimate of the price range you’re looking for. Wait for them to name a number first, in a formal expression of interest.
Once you’ve received the expression of interest, hire an intermediary broker to help you with the deal. And whatever you do, don’t sign a Letter of Intent that prevents you from shopping around for other competitive offers.