January 14, 2010

“We would like to sell 100 % of our company shares…”

We can’t criticize you for wanting to sell all of the shares of your company. However, I would advise you not to disclose this fact from the start.

Suppose that a shareholder of a company contacted you for selling their company shares to you. If he said “We would like to sell 100 % of our company shares…“, what would you think? If the owner of the company is elderly and does not have any family members interested in his business, then you might be understanding about the owner’s wish to sell all of the company shares. However, consider that the owner is still a dynamic businessman. Now, what will you think? I don’t know your answer. The participants in my seminars answered this question by saying that they would consider the company with a lot of question marks and the acquisition issue with real reluctance. Is there something very wrong with the company that the owner wants to almost run away?

What do you do in such a situation? Your check list and controls would triple. You would formulate various scenarios and would try to find where the assumed problem lies. Of course, to keep your peace of mind, you might easily decide not to be interested in this acquisition opportunity.

Thus we advise our clients to inform the potential acquirers about their wish to continue being a partner of the company after the sales without talking about the percentage of shares to be sold, considering that no personal issues like health problems force the owner out of the business. This aproach builds trust in the potential acquirers. The former owner of the company is not running away, but would be working together with the new shareholders.

It is interesting to note that with a high probability you will hear the question “will you agree to sell 100 % of your shares?” from the potential acquirer after the negotiations have started. After you have gained their trust, the acquirers do not see any further risk in purchasing all of the shares. Now, you will be in a stronger situation in the negotiations, and the value of your company shares could be higher.

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