Trade Sale

Key Highlights

• A trade sale happens when a company is sold to another business that intends to continue operating it, often to expand its own reach or capabilities.

• Trade sales happen a lot with startups backed by venture capital or with established businesses selling off parts they don’t need anymore.

What is Trade Sale?

A trade sale happens when a company is sold to another business that intends to continue operating it, often to expand its own reach or capabilities. It’s a popular way for business owners, venture capitalists, or investors to cash out and get a return on their investment. The buyer is often a company in the same or a similar industry looking to grow- maybe they want to reach new customers, grab cool technology, or add new products. Trade sales happen a lot with startups backed by venture capital or with established businesses selling off parts they don’t need anymore.

Advantages of Trade Sale

• Sellers get cash fast: A big lump sum means quick money and less risk.

• Buyers get a boost: They gain new markets, tech, or customers, and can make the business stronger by combining resources.

• Growth potential: The buyer might bring expertise or funds to take the business to the next level.

• Sellers might stay involved: They could negotiate to keep a role or benefit from the buyer’s bigger brand.

Disadvantages of Trade Sale

• Sellers lose control: They no longer call the shots or decide the company’s future.

• Integration hiccups: Merging businesses can be messy, affecting workers, suppliers, or customers.

• It’s complicated: The sale involves a lot of legal, financial, and operational work to make sure everything’s fair.

What’s Involved?

A trade sale can mean:

• Selling or leasing most of the company’s assets (like equipment or property).

• Merging with another company, where the original owners lose their majority say.