FREE TRAINING: 3 Keys to Sell Your Business with Confidence

The Big Bad Wolf … Beware or Befriend?

We all know the story of the cunning and threatening Big Bad Wolf. He is roaming about, ready to pounce on his helpless victim. Some version of this story has been told in countless fairy tales, and it never fails to raise our anxiety level.

Many business owners live with the same fairy-tale concerns about their competitors. Once you’ve gone toe-to-toe with a competitor over a period of time, you find yourself almost mythologizing them, imagining them to be ruthless and diabolical, ready to eat you at any point. Sure, I’ve had those same fears, though with years of perspective under my belt, I can see that in those situations, my competitor was pretty much like me, just a regular guy running a company trying to do his best to create value for shareholders and employees.  In hindsight, none of my competitors wanted to eat me, all of my fears were irrational.

But as they say, hindsight is 20/ 20, though in the moment, having hindsight is nearly impossible. This problem is particularly acute when selling a company, which gives rise to a really big problem…it is often the competitor that is the best buyer for a company. The competitor knows the industry, and they look to acquire a company that can help them expand geographically and/or into a new customer segment. More times than not, the competitor is what I call “the best buyer,” in that they can pay the most and move the fastest. But negotiating with a competitor is a tricky balance, they need information to assess the acquisition, but you don’t want to give them information they could use against you if the deal doesn’t go through. Moreover, many business owners are afraid their big bad competitor will just buy them and shut them down, stealing jobs and opportunity from the seller’s loyal employee base.

With 20 / 20 hindsight, I can assure my business owner clients that fears of the “Big Bad Wolf” competitor are largely unfounded. Having said that, before we even start substantive negotiations, we are exceedingly careful to clarify the potential buyer’s true motivation. Then once we’re in due diligence, we are hyper-focused on preserving the confidentiality of the information exchanged. But just know this, when it’s time to sell your company, the Big Bad Wolf might be your best friend, if you just seek to understand him a bit.

JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The principles above are true, but the names and fact patterns are changed to preserve the parties’ identities.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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