My Business Is Wanted By a Financial Investment Firm

Should I be happy?

A few weeks ago I was contacted by a friend after he read one of my articles.

He thought he would sell his business down the road, and he was interested in knowing the price he might ask. He told me that he would like not to look for entrepreneurs to buy his business but to be sought by a financial investment firm that would ask him to sell it. It is assumed that such investment firms live on "mountains of money." My friend thought that if he was contacted by such companies then he could ask for a higher price than he would normally ask. His idea was not bad at all.

A large part of financial investment companies are looking for successful companies that have not been contacted by their competition, in order to offer them a takeover. They know that the current owners will be flattered by the proposal and by what follows. Who would not be delighted with such an opportunity and a clear recognition of its success?

Usually, investment firms will negotiate a little, and will initially say they accept the asking price.

But the problems will begin to appear.

Anyone who has sold a used car probably had a similar experience: the buyer is looking for small scratches or signs of wear to show them to the owner in order to ask for repeated price reductions. We all know that a used car will always have small imperfections.

Financial investment firms know that there is no perfect business. Everyone has their own shortcomings, even if it is a very good company in all the essential points. They will do the same as car dealers. If at the beginning they didn't bargain but just wanted to seduce the current owners with the mirage of taking over, now the mess will start. Look for it to start in the stage of due diligence.

At some point it will end, one way or another. Either they will buy it at a much lower price than they had originally offered, or they will withdraw. No matter how it ends, it will not be good for the current owners. Why? Because from the first contact in which those investment firms expressed their intention to buy, the current owners, like any man, begin to make exit plans and think about what they will do with the money they will be rewarded for their years of work. Then they will indulge in the idea that they will sell it now and will not be involved as much as before, neglecting certain aspects. Soon, all this will be felt in the level of sales. Most likely, the first key employees will start leaving - they leave first because, being good, they are confident that they will find work anywhere else.

What's next? In a few months, a very good business becomes an average one or even less than that. The current owners could stop the whole process at any time. But now their only thoughts are to exit the business. In the end, maybe the business will be sold in some way. But how? And at what price? And where did it all start? From some thoughts or ideas we read somewhere, sometime… Then we re-heard and re-read them. Slowly, slowly we mastered them. And we began to believe in them becoming our reality. It would be a great achievement if we were sought by those who want to buy our business, and that those companies are sitting on "mountains of money."

If you are, or will be, in a similar situation, you must know that there are solutions. Just recognize the "pattern" in advance and react immediately. Usually, such a trap is played using humor so as not to hurt the investors. However, they are in the position of customers… So you can tell them jokingly that you assume what will happen next: that they will accept the price and then bargain for every little thing. In the end, ask them jokingly if you hit the target with your guess. You will feel the truth in their answer…

Whatever happens next, do the following:

- Look for as many potential buyers of your business as possible in order to have more alternatives and to be able to keep the price as high as possible.

- Loyalty to your key employees to stay with you at least until the transaction is completed.

- Do not stop the engines. On the contrary, if you want to sell your business at a premium price, turn them to the maximum and keep them that way until you receive the money. Do your best to keep your sales as high as possible during this time.

All this is very difficult to achieve. Running the business in an exemplary manner and dealing with the personnel policies within the company will take you many extra hours daily. But it's not impossible; it's just hard some days.

In those moments you may remember us. We will look for you and we will find other potential clients for your business so that you can succeed in what you set out to do.

Thank you for reading my article, and for your friendship.

PS: If you are still thinking about selling your business, maybe it would be more interesting to know how ready your business for sale is before entering the process of selling it. Specifically, how much could you lose from the negotiated price with a potential buyer, at the final negotiation (immediately after the due diligence stage) due to some unresolved aspects of your business in time? To do this, complete the online questionnaire with 28 questions in the next 8-10 minutes. You can find it here and the answer will be instant, in exact numbers, when it is finished. Good luck in everything you do!

Check your “business preparation for sale” for free using the online questionnaire with an answer on the spot. Success!

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