Avoid Proprietary Deal When Selling Your Business

How to Avoid One of the Biggest Mistakes Owners Make When Selling

October 4, 2018

One of the Biggest Mistakes Owners Make in Selling Their Company Is Being Lured Into a Proprietary Deal

When selling your business, one of the biggest mistakes you can make is getting lured into a proprietary deal. In these deals, acquirers target business owners without creating a competitive marketplace, which allows them to make weaker offers with more unfavorable terms.

What is a Proprietary Deal?

Acquirers use a proprietary deal (also called a “prop deal”) to approach business owners without competition. They often start by complimenting the business and building rapport. As this process unfolds, the owner becomes more emotionally invested. They may reveal key facts that ultimately put them in a weaker position when negotiations become serious. Acquirers know there’s no competition, so they take advantage of this.

How to Avoid a Proprietary Deal

To avoid falling into a proprietary deal, create a competitive process for your business sale. Take Dan Martell, founder of Clarity.fm, as an example. When Martell decided to sell, he invited multiple potential buyers to a meeting. These buyers knew each other, and the competition for the business became clear. By doing this, Martell made sure that no one had an unfair advantage.

Key Takeaways

- Create competition: Don’t settle for one offer. Set up a competitive environment.
- Be cautious: Beware of early compliments and friendly invitations.
- Protect your position: Always keep your business’s value in mind and ensure a competitive sale process.

By taking these steps, you can avoid proprietary deals and ensure you get the best offer when selling your business.

To learn more about how to maximize your company’s value while reducing unnecessary risk, click here. Whether you want to sell your business – or just know that you could – you’ll learn the eight things that drive the value of your company and suggestions on how to dramatically increase the value of your business.

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Gary Kieper

Certified Exit Planning Advisor (CEPA)
Certified Value Builder (CVB)
Certified Family Business Advisor (CFBA)
Certified John Maxwell Team (CJMT) Coach
DISC Trainer

Gary Kieper, Jr., a best-selling author and sales expert, empowers individuals and businesses. Through customized sales training, coaching, and strategic planning, he helps clients elevate sales, optimize operations, and navigate successful exits. As co-author of Ready, Set, Go! with Brian Tracy, Gary’s Selfless Sales™ Process revolutionizes sales. A sought-after speaker, he captivates audiences with insights on sales, transition planning, and business.

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