Selling a business is not a simple process. It requires careful planning, execution and teamwork to ensure the business seller (owner) maximizes the opportunity and can successfully exit the business. Entrepreneur.com has an excellent Top 10 List, full of solid advice to business owners thinking about a sale. If you are considering the sale of your business, carefully consider these recommendations.
Below is a Summarized list of “10 Mistakes to Avoid When Selling Your Business”:
- Lack of Preparation – Be ready, seal your gaps and make the business attractive
- Overconfidence – Don’t be too enamored with your own business. Be self-critical, try to see things through a Buyer’s lens and get an independent business valuation early in the process.
- Not Involving Professional Advisors – You should not act alone to save money. Expert advisors will not only pay for themselves but drive higher value, typically leading to a higher sale price.
- Hands-Off, Auto-Pilot Mentality – while owners should hire professional advisors to orchestrate the sale of a business, the owner(s) must be ready to speak with Buyers and remain engaged throughout the process.
- Failure to Pre-Qualify Buyers – while this is a key function of a business broker or sell-side advisor, you have to quickly recognize the motives and strength of a Buyer. Don’t get caught wasting your time with the “wrong” Buyers.
- Misrepresentation – Don’t sugar coat your businesses success and potential; be fair to the Buyer so that no red flags or mistrust happens.
- No Basis for Asking Price – Sellers almost always believe their business is worth more than it is. An overpriced business will not “get looks” and then creates angst in the negotiation process. Incorrect pricing is the #1 reason a business stays on the market too long. Purchasing an objective business valuation is an absolute must for most for-sale businesses.
- Insistence on All-Cash Offers – Securring an upfront all-cash deal is unrealistic and should not be expected. Not only are Buyers unwilling, but the Seller is overexposed to taxes.
- Confidentiality Breach – If word gets out your business is for sale, it can have a grave impact on your employees, customers and the future health of your business IF you do not sell. Confidentiality is paramount from start to fnish with your key advisors.
- Poor Transition – After selling the business, you still have a responsibility to ensuring the success of your Buyer. This can require many months, after a sale, which will likely be tied to the deal terms.
There are of course many aspects to selling a business, but the above list of 10 Mistakes to Avoid should be closely considered for today’s private business owners. Enlist the advisory services of professionals so that you can continue to operate your business, find the right Buyers, and compete on the “For Sale” market — while also maximizing your opportunity to sell and asking price.
If you’d like to discuss your valuation & appraisal needs, give us a call at 877-825-8249 and speak with a Sr. Valuation Advisor at not cost to you.