A Corporate Has Approached Me to Buy My Business. Should I Sell Directly?
Receiving an approach from a corporate buyer can be exciting.
For many business owners, it’s unexpected. A large company expresses interest in acquiring your business, and your first thought may be:
“Do I really need a business broker if I already have a buyer?”
The answer depends on your circumstances, but it’s important to understand that having a buyer is not necessarily the same as having the best outcome.
Why Do Corporates Approach Businesses Directly?
Corporate buyers are often looking to grow by acquiring existing businesses rather than building new operations from scratch.
They may be interested in:
Approaching owners directly can be an efficient way to identify acquisition opportunities before they become publicly known.
The Advantages of Selling Directly
Selling directly to a corporate buyer can offer some genuine benefits.
Depending on the circumstances, they may:
In some cases, a direct approach may result in a successful transaction.
However, it’s important to consider the bigger picture before making a decision.
What Many Business Owners Overlook
When only one buyer is involved, there is little competitive tension.
Without competing interest, it can be difficult to know whether the proposed price and terms truly reflect the market.
Just as importantly, price is only one part of a business sale.
The structure of the offer can significantly affect the final outcome.
For example, a corporate buyer may seek:
These conditions may be entirely reasonable depending on the transaction, but they should be carefully considered alongside the purchase price.
A slightly lower offer with fewer ongoing obligations may, in some situations, represent a better overall outcome than a higher offer with significant post-settlement commitments.
Competition Can Improve More Than Price
One of the advantages of taking a business to the broader market is that multiple qualified buyers may compete for the opportunity.
Competition doesn’t always increase the sale price.
It can also improve:
When buyers know they are competing with others, they may be more willing to present their strongest commercial offer from the outset.
A Corporate Buyer Can Still Be the Right Buyer
Introducing a business to the market does not mean excluding the corporate buyer who first approached you.
In fact, they may ultimately become the successful purchaser.
The difference is that their offer can be assessed alongside interest from other qualified buyers, allowing you to make an informed decision based on both price and commercial terms.
Choosing the Right Sales Strategy
Every business is different.
In some situations, accepting a direct approach may be the right decision.
In others, a structured sales campaign involving multiple buyer groups may produce a stronger outcome.
The most appropriate strategy depends on the business, the industry, the owner’s objectives and the nature of the buyer’s proposal.
Insights from JCL Private
At JCL Private, we don’t believe business owners should be limited to one type of buyer. Depending on the opportunity, we engage with a broad range of qualified purchasers, including private buyers, strategic acquirers, industry participants, investors and corporate groups across Australia. Creating competitive interest can strengthen your negotiating position and improve not only the purchase price, but also the overall terms and conditions of the transaction.
Key Takeaways
Have you been approached by a corporate buyer?
Before accepting an offer, it’s worth understanding how it compares with the broader market. JCL Private can provide a confidential, obligation-free discussion about your options and help you assess the commercial terms of any proposal before you make a decision.
Whether planning an immediate exit or simply exploring your options, we welcome a confidential discussion.