Option 1: Sell to Another Company

Advantages

• High potential profit. In a business acquisition, you negotiate the price. What is the company worth to a particular potential buyer? Does it offer strategic value to a buyer that would increase your price? In the right situation, the business’s value, and your profit from the sale, could rise.
• Possible bidding war. One lucrative situation would involve a bidding war between two or more potential buyers. If your business appeals to several potential acquirers, you can let them compete to see who wants it most.
• Potential synergies. Perhaps your company is a particularly good fit for another firm. You might have a strong position in a market segment that another company wants to expand into. Or you might own a proprietary technology, business process or a brand that is of particular value to a certain company. If the potential value of your firm and its assets is greater for a certain buyer, that should increase the sales price.

Disadvantages

• Could be a bad fit? What if cultures clash? In some situations, your company might not fit well with another. If the two companies have different corporate cultures or ways of doing business, it could be harmful or counterproductive to merge the two. That might be difficult to know, but look for red flags when meeting with potential acquirers. Ask probing questions. Evaluate key personalities, business methods, and how open each organization is to change.
• Possible loss of reputation. When you sell your company to another firm, you generally lose all control over your company’s brand. As a result, poor decisions by the new owners may be associated with you – and your personal reputation may be affected.
• Loss of control. Without an ongoing connection to the business, you simply lose control over what used to be yours. Will you be able to accept that? Alternatively, you could structure the deal so that you’ll maintain some involvement through a transitional period. But again, that could lead to some stress or frustration, as you’ll no longer be fully in charge.

Deciding Factor