Today's episode of the podcast, Robert Hirsch from Freedom Factory talks about "How do I Approach a Competitor to Buy My Business?."
Listen to the podcast, watch the video, or read the transcript below.
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Transcript of Podcast
Hi, it's Robert from Freedom Factory. And I want to talk to you about something pretty new ones today, which is how to approach a competitor to buy your business or how to sell your business to a competitor. And it's a question that a lot of entrepreneurs have, but it's really difficult and it depends on a lot of factors, right?
Are they larger or are they smaller? Competitors or what I call coopetition or friendly competitors. Do you have an existing relationship or when you're both speaking at the trade shows, do you walk by each other with a look on your face? These are the little complex pieces to be able to do it because what every entrepreneur fears, I know what I fear. If I went to one of my competitors and said, Hey, are you interested in buying from me? They're going to use that in the marketplace to sell against me. Well, I mean, who knows how long they're going to be in business. They approached to me to sell.
That's the last thing that I want out there. So here at Freedom Factory, one of the big things is to use an intermediary. When you're selling your business, a broker is great, to be able to approach a competitor and still keep you anonymous. Using a consultant is very good if it's a competition kind of an internal type piece.
But there are certain things that you really want to avoid when approaching competitor. One thing that can make it really digestible is put yourself in that competitor's shoes and think about why they would want to buy your business because if you can make the right case to them on why it makes sense to buy your business, of course they're going to fall in and it's going to make a lot of sense.
Hi, I'm Robert Hirsch and I've been an entrepreneur for more than 25 years. I'm the CEO of Freedom Factory, and all we do is help our fellow entrepreneurs sell their business. The one key takeaway that I would think about when you're looking at how to approach a competitor is never approach a competitor and use that as your only sales option because if you do, one of two things is going to happen. One, some of the things that we talked about and some of your fears come true or a second, it's a pretty uncompetitive environment and you don't sell your business for maximum value. You've worked, in some cases, two, five, 10, 20 years on your business, you want to maximize the value from it.
So when I look at a competitive sale, even if I think that's going to be profitable and probable, I always do it as a part of a larger sales process. Meaning I'm always looking to increase the deal tension. So I still advertise it in 27 different places. I still go out to private equity firms and venture capital firms and entrepreneurial organizations, even if I think a competitor is likely to buy it.
And the reason that we do that is we want to maximize the deal tension. So what I mean by maximize deal tension is you want multiple people that are interested in your business, but not just multiple people that are interested. You want multiple people that are interested at the same time. Right. There's only one of your business. When you have multiple people wanting to write a check, it can get very competitive and we can often maximize the sales price.
So when you're thinking about selling it to a competitor, and maybe that's a way to take an easier sales process, I would really caution you to do so, because if so, there's really two options and neither of them benefit you or the entrepreneur. Now if you want to talk about how to approach competitors or what's your business worth or how do I run a process on your business? Why don't you give us a call at Freedom Factory? It's free. We're happy to dive in and we're looking at comps every day, and again, as an entrepreneur, the better information you have, the better decisions you're going to make it. We would love to be on your team. I'm Robert and I look forward to speaking with you soon.
Thank you so much for watching. Please like and subscribe.
Contact Freedom Factory
Freedom Factory
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111
Phone: 844-MAX-VALUE (844-629-8258)
https://www.freedomfactory.com/
https://g.page/freedom-factory-denver
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Learn more about the managing partners, Tyler Tysdal, and Robert Hirsch.
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