Top 10 Mistakes To Avoid When Selling Your Business
- Neglecting the day-to-day running of their business with the reasoning that it will sell tomorrow– keeping your eye on the business is extremely important as buyers are looking to purchase successfully operated businesses. If your business slides so will your offers.
- Starting off with too high a price with the assumption the price can always be reduced- a proper valuation should be done to determine the best price to not leave any money on the table, yet not too high where buyers do not show any interest.
- Assuming that confidentiality is a given- proper steps can and should be taken to keep the sale of your business confidential but we are dealing with people and things happen. Proper steps will help reduce the risk and a business broker can help put these in place.
- Failing to plan ahead to sell / deciding to sell impulsively– business owners should really plan ahead 1-2 years plus when selling their business. Truly it is never too early to start planning.
- Expecting that the buyers will only want to see last year’s P&L– typically the last 3 years financials will need to be provided, and sometimes more. This is one of easiest and most overlooked items- you MUST keep your books accurate and up to date.
- Negotiating with only one buyer at a time and letting any other potential buyers wait their turn– theres a saying in the business sales industry- “one buyer is no buyer.” A broker can help manage this process to attract multiple buyers and offers at the same time.
- Having to reduce the price because the sellers want to retire and are not willing to stay with the acquirer for any length of time- naturally transition time is very important in the buyers eyes. Buyers simply will move on to another business where the seller will help with the transition improving the odds of success after the purchase. This is also a negotiation “term” to go along with the sale price.
- Not accepting that the structure of the deal is as important as the price– simply put… “You can’t separate the price from the terms.” Along with every offer not only will the price be different but so will the terms.
- Trying to win every point of contention- negotiating is just that… negotiating. Deals get done when both sides are will to compromise to reach a common goal- the sale of the business.
- Dragging out the deal and not accepting that time is of the essence– The 2 biggest items that kill deals are “time” and “surprises.” Think of it as a tennis match… as each offer or counter offer is made… you have “received the ball,” the idea is to quickly “return the ball” to the other player and not leave the ball in your court. This will help determine if a deal can be made and in a timely fashion saving time for all parties.