Dealing with competitors once the morsel is out there

If your competitors know you are up for sale, they could use this information to undermine your business. TOM McKASKILL outlines your best strategy.

By Tom McKaskill


Most entrepreneurs don’t want their competitors to know they are thinking about selling or are actively looking for buyers. It can just be an invitation to go in for the kill.


When selling a business, most owners anticipate that their competitors could use this information against them to recruit their staff, undermine their sales activities and create customer and prospect uncertainty.

Their fears are not without substance: this happened to me with my first business.

The biggest danger to the business occurs where the effort to sell the business is protracted over a long period of time. During this period the employees are unsettled and competitors use the uncertainty surrounding the future of the business to undermine sales efforts.

Existing customers may be concerned about future support and will also delay repeat purchases or fail to provide referrals. Thus the first line of defence is to ensure that the sale process is very short and effective.

This can be done by being well prepared for sale discussions, ensuring the business is ready for extensive due diligence and that a short list of competing buyers is waiting in the wings ready to activate. The sale process itself should only be conducted if the entrepreneur already knows an acceptable price can be reached, and thus the business will definitely be sold.

There are some other steps that should be undertaken to provide the best strategy for selling the business. The first is to acknowledge that the business may be sold at some time in the future if the offer is attractive and that the potential of the business can be better executed by a better resourced buyer.

Such a position gives comfort to both employees and customers and acknowledges the reality of business. In many cases, small companies cannot provide the level of support to products and services that larger corporations can, nor can they offer the best career paths. The right acquirer can provide both customers and employees with a positive outcome.

You should also be providing your best managers and employees with incentives to develop the business for an ultimate sale to the right buyer. Incentives might include shares, options and bonuses. This also ensures that you don’t lose them in the run-up to the actual sale.

At the same time, you should be considering how to best transition the business across to the buyer to ensure that customers will be positive about the move – thus providing retention bonuses to ensure your key employees stay with the buyer for some period of time, which reduces the risks to the buyer as well as the current customers.

Direct competitors are best dealt with by indicating that the business is not for sale, but that the owning entrepreneur would always be interested in discussing the future of the business with a buyer that can fully support and develop the underlying business in the best interest of staff and customers.

As long as you don’t need to sell, there is nothing wrong with being positioned to take advantage of a good offer. If you do need to sell, make sure you are well prepared and can execute the sales process quickly.



Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.


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