August 29, 2025
Selling My Business to Local Rival – does it ever work? Article from Jonathan Fagan Business Brokers, specialist business brokers for solicitors’ firms and accountancy practices in the UK.
One of the great myths in selling a business, which applies across all sectors, is that the best person to buy your business from you is one of your known, local competitors. After all, they know your business and its reputation. What could be a better fit than somebody five doors up the road simply taking over your practice, paying you a premium, and you walking away knowing everything is the same as it was before? The same applies with large practices – we often get sellers of smaller firms giving examples of the local regional firm acquiring other similar sized practices in recent times. Very often sellers have the notion that the local regional firm or the local rival up the road is going to pay a good market premium to acquire their business.
Unfortunately, this is very often unachievable. There is a theory in the trade that if a local firm or a competitor wanted to buy your company they would approach you directly to discuss. If they don’t contact you directly without prompting to discuss a purchase of your business, then it is highly unlikely that they are interested, or in a position to afford to make an acquisition.
However, this is unlikely to stop the local rival you make contact with expressing a keen interest in opening talks with you. These talks may well rumble on for years to come for the following reasons.
A Trusted Partner
Before listing all the reasons why selling your business to a local rival is never a particularly good idea, we should say that doing a deal with parties you know can be a very positive thing to do. You will be dealing with people you probably know and trust, you can get a deal completed knowing that your clients will be well looked after and you can move on in confidence that everything has been dealt with safely. However, the option will almost always be along the lines of handing over your business without a price being paid.
Reasons why selling to a local rival may not be a very good idea.
Cheap Recruitment
If you approach your competitor, they will immediately know that it is highly possible that there are going to be a number of staff available for employment very shortly, or at least there may well be a lot of staff who are unsettled by your efforts to sell your business. It is highly likely also that your staff are going to find out you are considering a sale. This is one of the worst things that can happen when it comes to a business sale, because employees do not like being unsettled. Finding out that you are planning to sell the business to someone they don’t know will immediately unsettle staff who will look around at other options to get settled again. It can jog people into action to make a move they had not actually considered before.
Useful Market Intelligence
The local rival may spend some time expressing an interest, get all your financials off you, consider your staff list and salary levels, look at your client base, and then come back and tell you that actually your business isn’t worth anything and they’re not interested, or similarly they’ll delay for a long period of time, then come back and say that yes they are interested, but with an offer that requires you to join them as consultants, close your business down and pay run off cover. It will give the rival lots of valuable information about your business at the very least.
Other People Do It – Why Can’t We?
You don’t know the circumstances of the other sales. It is highly likely that the seller had or was about to experience financial or structural difficulties, and was in dire need of disposal quickly, which meant the best option for them was to find anybody prepared to take over the business, and in which case the deal they got wasn’t really a deal at all. The usual would be for the seller to close their firm down, transfer their files and staff to the buyer and then pay run off cover.
Buyer Perspective
The moment you contact the local rival to open talks, you are in a position of weakness. They are aware of your end plan, which is to close your business. A local competitor does not need to purchase your business if they’re interested in taking over your clients. They can simply target your clients through marketing without paying you any money for the privilege. Similarly, they can target your staff. If you give them all the information about your firm, which includes who your clients are, who your staff are, how much you pay them, and every aspect of the structure and formation and operation of your business, you are making their life considerably easier if that is the route they are planning to take. Our experience of some solicitor owners is that they can be quite ruthless and will take advantage of any perceived naivety!
Summary
Making an approach to local rivals to offer your firm for sale rarely achieves the outcome you expect. However, if you are looking to arrange for your clients to be dealt with by a firm you respect and trust, do a deal with known parties, and retire or move on without any stress, then doing a deal with a local rival can be a very positive thing. It will never offer you the best price for your business, but it will offer more certainty.
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