Selling Your Company - International Relationships Can Offer a High Return

Building international relationships early can help you get a better price when selling your business.

If an owner has a long-term strategy of preparing a business for sale, what are the advantages to them of seeking international relationships now?

If they take steps to build international relationships early, they're certainly going to know a lot about the international market, or the market for their products in a particular country.

And even if you end up selling your business to an American, the fact that you have an international outlet, international business relationships and a position in a foreign market makes your company more valuable and will generally attract a higher price.

Let's take a step back to the beginning of the process. How would someone identify a foreign buyer?

It's a lot harder to find an international buyer but, if you think about it and plan for it, you may already have international relationships that can bring you important information.

You've already had international customers and your international customer may be a potential buyer. Your customer may want to move in to production or service in this country, so think about your own foreign customers.

Secondly, you may have foreign competitors. A foreign competitor may be a potential buyer of your business.

There are also consultants and investment bankers who make it their business to stay in touch with potential clients abroad and with the marketing, the economic situation and business situation in particular countries.

Then think about your product, the product that you're making or service that you are rendering. Are there particular parts of the world where you think that service or that product might have a special value? It may not being provided as well as you provide it. So that may lead you in appropriate directions.

What happens when you start getting involved in discussions about selling to foreign companies?

When we talk about developing negotiation strategy, one of the important questions to ask is what are the potential interests of the other side? And you need to think hard about that.

Is it simply because you're a competitor and they want to get you out of the market, or is it this is a foothold in the business? What is it that the potential buyers might see in your business? What value might they see in your business that may lead you to think about particular companies to buy it?

The other thing to consider is exchange rates. The assets of your business may seem cheap to a foreign buyer because of the relationship between that foreign buyer's currency and the US dollar.

And if the US dollar is weak against the country of a strong currency, your business in local foreign currency terms may seem quite attractive to a potential buyer. So you need to think about the differentials and exchange rates, monetary exchange rates in developing a strategy for selling your business.

The other thing you have to think about is if you sell your business, what is your role going to be after the sale?

Are you simply going to take your money and go to Florida and play golf, or do you want a role in that business? A foreign buyer may want you to have a role in the business as a consultant.

Your business is a lot more than the assets on the factory floor. A lot of it is the knowledge in your head. You have certain contacts, you have certain business relationships.

A foreign buyer may realize that that's going to take a long time before those relationships can be transferred to them; and therefore, that buyer may want to keep you on in some role to help them make this very important transition.

Often for them what is really important is the relationship, the true connection, between the company and their customers.

Also the foreign buyer has got a lot to learn about American culture, American business practices, and you as the former owner can help with that immensely.

Maybe in terms of making your sale attractive to a foreign buyer you might indicate your willingness to be involved and to help the transition take place.

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