company

How to Decide Whether Your Company Should Take a Buyout

By Phương Uyên Trần

The situation will occur—it almost always does for a company that has found an effective way to deliver the right product to the right customers in the right way. Those are the companies that have connected with their market in a personal way and as a result have been successful, yielding greater growth. That growth will garner the attention of the corporate giants who struggle with the ability to make similar intimate connections with the different local markets they serve. As an independent, locally-operated company, that attention can be both exciting and overwhelming. 

Like any entrepreneur who has invested their time, resources, and passion into a venture, seeing its success and the subsequent attention it brings from larger companies can be a satisfying feeling. The company you built is seen as valuable and is wanted as a part of a strategy for a larger company. In short, it means you’ve done something right. However, “selling out” isn’t always the smartest choice for these independent companies. 

Coca-Cola offered THP $2.5 billion dollars for a controlling interest in Tan Hiep Phat Beverage Group. On its face, it would be difficult for any business owner to walk away from that kind of money.  However, you’ll find the decision to take a buyout or not will come down to much more than money. As you face inquires or negotiations with larger corporations, think about these two critical considerations:

What will this buy-out or partnership mean for the company I’ve built?  Not all transactions are transparent; you won’t necessarily know the extent of the company’s plans for your company; however, as much as you can find out, understand the role your company will play in the other company’s future. How will that impact what you created? Are you comfortable with the inevitable future of the company you built within the boundaries of the new partnership/ownership?

 Is there more you still hoped to accomplish?  The idea of walking away from a great deal of money can be incredibly nerve-wracking. However, if you feel strongly that there is more you want to accomplish, and you have the energy and desire to make it happen, perhaps the current corporate suitor is not the right one. Just because you walk away from a buy-out today, doesn’t preclude you from entertaining another one in the future—if that is what you want. 

Partnerships of every kind are key to any company’s success; those are opportunities that you’ll frequently find yourself identifying, balancing, and maintaining. The corporate giants that want to gain control are the negotiations you need to be especially prepared for. Remember, these opportunities are about more than just money—they are about the future of the company you built, along with the lives of those who have contributed to it. 

Learn more about competing with the corporate giants of the business world by checking out my book today!

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