Briggs AnalyticsLicensing your data vs selling the business: what is the difference?
In this article
The difference in one tableDoing bothThe orderWhat to disclose to an acquirerThe mistake to avoidThe difference in one table
| Selling the business | Licensing the records | |
|---|---|---|
| What changes hands | The company: customers, contracts, people, assets | A scrubbed copy of the operating record |
| What you keep | The price | Everything, plus the fee |
| Timeline | Months | Two to six weeks |
| Who pays | An acquirer | A data buyer; the owner pays nothing to Briggs Analytics |
| Can it be repeated | No | Yes, if the license is non-exclusive |
Doing both
Owners who are retiring or selling often license first. The published figures for an operating company with 20 or more people and three or more years of records run from $100,000 to $1,000,000+, and that money arrives before the sale and outside it. The company still owns its records afterwards, so the acquirer gets exactly what they were buying. Retiring or selling: the overview.
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License, then sell, when you can. A license closed before the letter of intent is simply a completed contract the acquirer reviews in diligence. A license started during diligence becomes a negotiation point. After the sale, the records belong to the acquirer and the decision is theirs.
What to disclose to an acquirer
The license agreement, in full. Non-exclusive licenses rarely matter to an acquirer because the company keeps the originals and can still use them however it likes. An exclusive license matters, because it means the acquirer cannot license the same records to anyone else. Most owners choose non-exclusive for exactly this reason unless the exclusive premium is large.
The mistake to avoid
Letting the broker or the acquirer treat the records as part of the price without pricing them. Acquirers of small companies almost never pay for the operating history as a separate asset. The data buyers do. Get that money first.
In short
- A sale transfers the company. A license rents out a scrubbed copy and you keep everything.
- License first, sell second, when you can. A closed license is a diligence document, not a negotiation.
- Non-exclusive licenses rarely matter to an acquirer. Exclusive ones must be disclosed.
- Acquirers do not pay for the operating history as a separate asset. Data buyers do.
Questions owners ask.
Will a license lower my sale price?
A non-exclusive license almost never does, because the company keeps its records. Tell your broker early and show the agreement.
Can the acquirer license the data again after buying?
Yes, if your license was non-exclusive. That is their asset to use.
We signed an LOI last week.
Talk to your deal lawyer before starting anything. A license during diligence is possible but needs to be disclosed and agreed.
