- September 10, 2024
- Posted by: Business Brokers & Consultants
- Categories: blog, Seller Articles
Selling a business is a complex process that can be fraught with pitfalls for anyone unfamiliar with the complex dynamics involved. Unfortunately, the majority of business owners fall into this category. They are unaware of what it takes to turn the dream of selling into a reality having never gone through the process before. The easiest way to avoid these deal-killing pitfalls is to have a Brokerage professional at your side. You will gain perspective from their experience and avoid the most common mistakes. This article address the most common mistakes and offers some quick tips from the pros at Business Brokers & Consultants.
Keep Your Eye on the Ball
Many businesses fail to sell because the owner becomes obsessed with the pending transaction. In the process, they fail to keep up with day-to-day operations. Sales may go down or details that would normally be given priority escape their notice. It’s important to keep in mind that the sales process can take months and these are the most important months!
Savvy buyers will look at the last 12 months of business history under a microscope. They consider them to be key indicators for growth and potential problems. Any change that has the appearance of “red flag” will cause them alarm. This may be as material as losing a key client, or as immaterial as allowing your bookkeeping to fall behind if it gives the impression of something gone awry. Pay attention to every aspect of your business while it’s on the market and avoid causing prospective buyers any concern.
Confidentiality is a Top Priority
Another mistake business owners make is breaching confidentiality. They do not consider the practical dynamics of marketing a business on their own; how they will market it, answer inquires from prospective buyers, and keep the whole affair quiet. They certainly do not consider how they will use and enforce non-disclosure agreements. As a result, word gets out that the business is for sale and nothing disrupts business more than the rumors and speculation that go along with that. Our Intermediaries understand this, and we make sure potential buyers do too! Our staff, our contracts, and our workflows provide layers of protection and greatly improve the odds of a successful sale.
Seek Out Another Perspective
When you have been the boss for years, you’re likely to get set in your ways. Business owners are no exception. Moreover, compromising anything that involves your business is inherently difficult. As a result, business owners may wish to dictate every single item in the negotiations. This is a sure way to send buyers running. When you come off as unreasonable and demanding in negotiations it casts serious doubt on the likelihood of a smooth transition post acquisition. Some fights make sense and others should be avoided. Remember, it’s important to be flexible and choose your battles. Everyone can benefit from a third-party perspective, and this is another of the important ways that Business Brokers Intermediaries help.
Prepare Early
It can take years to properly prepare a business for sale. All too often, business owners don’t think through the sale of their business until the 11th hour. Some business owners may even decide to sell on a whim or because of burnout. This is the worst case scenario. A good rule of thumb is to run your business everyday as if you are going to sell it tomorrow
We know precisely what it takes to get a business ready for sale. For example, areas that are particularly important to considering include buying out minority stockholders, dealing with any pending lawsuits and cleaning up the company balance sheet.
Keep Your Pricing Realistic
A fifth deal killer comes in the form of placing too high a price on a business. We understand that business owners wants to receive top dollar, after all, your business typically represents the greatest asset in your portfolio. However, an unrealistic asking price can quickly destroy any chances the business has of being sold. We will work with you, our valuation team, and appraisers as needed to achieve a fair and realistic price. In the process, we dramatically increase the chances of a quick and successful close.
Buying or selling a business can have many twists and turns. Our job is to keep the road to a successful close as straightforward and trouble free as possible. Working with us in advance of sale is the simplest and most effective way to avoid problems before they arise.
Copyright: Business Brokers & Consultants, Inc.
This post is based on How to Save a Deal which appeared on Deal Studio – Automate, accelerate and elevate your deal making.