The BizFilings blog covering business tips and trends.
Selling a Startup to a Competitor
Published on Dec 30, 2010
Read our article, 'Selling a Startup to a Competitor' at 'Time to Start Up,' the small business blog by BizFilings.
When an entrepreneur reaches the point in the development of a business that it is ready to be sold, he or she then faces a number of challenges in determining the value of the company, deciding on an exit strategy, finding potential buyers and negotiating the transaction.
But all those obstacles are nothing without good timing. Forming a company is dependent on market conditions for sure, but selling a company is even more so. There are also the recent activities of competitors and, especially, potential acquirers to consider.
If the timing is right, selling to a competitor may actually be a quick means of exiting a business. For one, it ensures the transfer of the company over to a party that already understands how the industry works.
"We sold the greeting card part of our business to a competitor because we knew they could take care of our customers," Andrew Warner, co-founder of Bradford & Reed, told Inc. magazine. "We basically got a little bit of money up-front, a percentage of sales in the future and a guarantee they would take good care of our customers. I was able to walk away 30 days after the deal closed."