How to Attract a Giant to Buy Your Company
If you're thinking about selling a business, it is important to remember that great businesses are bought, not sold - that is, you want to be the one who is chased. If you seem over-eager to sell your business, you will likely look back and regret how your desire impacted your negotiating tactics getting you a worse deal.
But, if you want to sell your business, it is hard not to appear eager. Accordingly, it is important to maximize the value of your business with a strategic approach that will potentially attract bigger companies to WANT to acquire your business, instead of just thinking about how quickly you can sell.
One smart way to go about this is approaching a potential acquirer with an offer to partner with them, instead of offering to sell them your company.
Such strategic partnerships are great way for a bigger company to get first hand exposure to your strategic assets, because most partnership discussions start with a summary of each company’s strengths and future objectives. As you reveal your aspirations to one another, a savvy buyer will often realize there is more to be gained from simply buying your business than partnering with it.
Facebook Buys Ozlo
For example, look at how Charles Jolley played the sale of Ozlo, the company he created to make a better digital assistant. The market for digital assistants is booming. Apple has Siri, Amazon has Alexa and the Google Home device now has Google Assistant built right in.
Jolley started Ozlo with the vision of building a better digital assistant. By 2016, he believed Ozlo had technology superior to that of Apple, Amazon or Google. Realizing his technology needed a big company to distribute it, he started to think about potential acquirers. He developed a long list, but instead of approaching them to buy Ozlo, he suggested they consider partnering with him to distribute Ozlo.
He met with many of the brand-name technology companies in Silicon Valley, including Facebook, which wanted a better digital assistant embedded within its messaging platform. They took a meeting with Jolley under the guise of a potential partnership, but the conversation quickly moved from “partnering with” to “acquiring” Ozlo.
Jolley then approached his other potential partners indicating his conversations with Facebook had moved in a different direction and that he would be entering acquisition talks with Facebook. Hearing Facebook wanted the technology for themselves, some of Jolley’s other potential “partners” also joined the bidding war to acquire Ozlo.
After a competitive process, Facebook offered Jolley a deal he couldn’t refuse, and they closed on a deal in July 2017. Jolley got the deal he wanted in part because he was negotiating from the position of a strong potential partner, rather than a desperate owner just looking to sell.
As this example illustrates, when it comes time to sell a business, it is often better to explore partnerships and strategic alliances than trying to unload your business quickly. By following Ozlo's example, you will have the leverage of being wanted instead of chasing after a big sale.
If you are interested in learning more about how to maximize your company's value before a sale, we urge you to take our Value Builder Assessment today!