In the business world, success is measured in a number of ways. One clear indication that your business has succeeded, or is on the road to success, is that another company wants to buy it. For many entrepreneurs, an offer is not just a sign of success but is the ultimate goal; however, not all business owners are interested in selling. Selling a business for a substantial profit certainly makes good financial sense; however, there are reasons why you may wish to reject an offer nevertheless. Consider the following three reasons why you may decide to reject an acquisition offer:
Price
Assuming that your business is financially healthy, an offer that under-values your business based on its worth in the current market will likely be rejected; however, that doesn’t necessarily mean that you should accept a fair market value offer without evaluating your options. After all, your business could be worth considerably more in the near future. If, for example, your business has been showing steady growth over a significant period of time you may be willing to gamble that a more lucrative offer will be forthcoming if you hold out.
Reputation
Another reason why you may decide to reject an acquisition offer is the reputation of the prospective buyer. If the company offering to purchase your business has a questionable reputation with regard to past acquisition this could give you pause. A history of failed transactions, for example, might make you leery of entering into a contract with the company. On a more personal note, if the prospective purchaser has a reputation for “cleaning house” after an a merger, or for making sweeping changes to recently purchased companies, you might reject the offer because it matters to you what happens to your company and the employees post-acquisition.
Personal
Even if the price is right and the buyer’s reputation is solid you might still decide to reject an offer because your own personal vision for the company has yet to be realized. Success is not always measured by money alone. Larger companies frequently acquire smaller ventures while they are on their way up. While this allows the start-up to profit early on it also results in the larger company reaping the long-term rewards and accolades of success. Holding on until your vision is realized may be both financially profitable and emotionally rewarding.
Simply receiving your first offer should be viewed as a positive sign for your company’s future. Clearly, the business world has taken note of your company and is convinced that it shows promise for the future or the offer would not have been tendered. Ultimately, however, the decision to accept or reject an offer depends on many variables, both personal and professional. Understanding where your goals fit in is a good start to evaluating any acquisition offer.
At any point in time when you are considering selling, be sure to have your paperwork in order, ready to be examined by the prospective buyer's team. Using a virtual data room is the easiest, most secure way to store and share confidential files, protecting your sensitive company information during the evaluation process.
