How to Sell Your Business, page 15

Idenitifying Potential Strategic Purchasers, continued

It’s worth thinking about this kind of strategic acquirer to see if you can identify anyone whom you should approach, but often if the fit is truly good they will approach you, rather than the other way around.

Customers

You know who your customers are and a great deal about them. This means that you can easily qualify customers as potential strategic acquirers.

For a customer to be a strategic acquirer, the customer must:

• Have the means to accomplish the acquisition;

• Make substantial use of your product in a critical capacity;

• Have no other likely sources for the product.

If a customer meets these criteria, you should approach them to see if they have an interest in acquiring your business.

Suppliers

You also know who your suppliers are. For a supplier to be a potential strategic acquirer, the supplier must:

• Have the means to accomplish the acquisition;

• Derive a substantial portion of their total revenue from selling to you; and/or

• Have a synergistic use for your product combined with products they manufacture or derive from other sources.

Competitors

While you probably have a pretty good idea who your competitors are, you should construe this category broadly. Don’t limit it just to companies that you think of as immediate competitors.

A competitor may be interested in acquiring your company if:

• You represent a substantial threat to the competitor, which the acquisition would eliminate; and/or

• The combination of the competitor and your company will be better able to dominate the marketplace; and/or

• The competitor believes that your proprietary processes, or unique ways of doing things, will be of great value and that they cannot obtain these processes without acquiring your company.

Continued next page

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