How to sell start-up to a competitor?
I have a startup that has developed a few software products. I'm finally having a decent amount of success in getting people to use the products, but I am tired of putting money into this and would just like to sell the startup to a competitor for my costs to date (around $6,000). At the competitors' prices per program, that's 60 copies of the product.
If the competitor is a reasonable person who thinks that his sales could increase by 60 copies by buying me out (since my users would go to him), he should be interested...the question is how to make him understand that.
How does one sell to a competitor? I am a lawyer and know how to structure the transaction and do the documentation for it, but how does one approach a competitor to get this going? Email? Letter on letterhead to the competitor's CEO? Or just wait?
Thanks.
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you might want to consider selling it to someone else who is looking for a business. I sold my company/IP to someone else in Australia for something on the order of what you are talking about. I was moving on to another venture but did not want to leave the customers or the hardware business my software supports in a lurch. It worked out great for everyone. – Tim J 13 years ago
2 Answers
$6,000 is a tiny amount to worry about when talking about selling a company. How big is this competitor? The first step would be to get a meeting to get to know each other. If you are in the same city, that shouldn't be too hard.
Otherwise, just call them up and tell them you have customers you can bring them. That should get anyone's attention. Don't "sell your company", but ask them if they'd like you to send your prospective customers over to them, and if so, to negotiate something. Outright acquisition would only be one possibility, but based on the amount of money you are trying to recoup, it doesn't sound like you care much whether this is a company sale, IP, or lead generation deal.
@Alain makes a good point about making them an offer but before you do that, you really need to solidify what you want and what you bring to the deal.
Approaching them is something that might be a little tricky. I would first understand their customer base and try and get on their "radar" some other way than a cold call -- like a mutual introduction.
That way, they get to know you before you make the pitch. That's important since you want to be in a strong position in terms of your credibility.
