Selling Your Business: What About The Don’ts?
I have shared many important “do’s” regarding selling your business. Now I want to share several things that should be avoided, or “don’ts”, based on my personal experience, in order to ensure a smooth and successful transaction. Some of these include:
Don’t #1: Not prepare financials and other relevant documents: This can create delays in the sale process and may cause potential buyers to lose interest in the business.
Don’t #2: Not disclose all information about the business: Failure to disclose important information about the business, such as outstanding liabilities or legal issues, can lead to problems later, and can also damage the reputation of the business and the seller.
Don’t #3: Set an unrealistic asking price: Setting an unrealistic asking price can turn off potential buyers and can also make it difficult to negotiate a fair deal.
Don’t #4: Not complete your Due Diligence on potential buyers: Not completing your Due Diligence on potential buyers can lead to a sale to an unqualified or unprepared buyer, which can lead to problems in the future.
Don’t #5: Not consult with legal and financial professionals: Selling a business can be a complex process, and not consulting with legal and professional professionals can lead to mistakes that can be costly and time-consuming to fix.
Don’t #6: Not be prepared to walk away from a bad deal: Sometimes, it is better to walk away from a bad deal than to accept an offer that is not in the best business interest of the business or seller.
Don’t #7: Not think about post-sale transition: Not thinking about what will happen the morning after the sale is very, very important and can cause a myriad of issues for both the buyer and the seller in the long run.
Don’t #8: Not be flexible and open to negotiation: Being inflexible and unwilling to compromise can make it difficult to reach an agreement and close a deal.
Don’t #9: Not keeping the sale confidential: Disclosing the sale of the business prematurely or to the wrong people can lead to negative consequences such as employees leaving, customers cancelling contracts, or publishers renegotiating or changing margins and commissions. IF the buyer is a public company, it is also illegal.
Don’t #10: Not have an exit strategy: Not having a clear plan for what you will do after the sale of the business can lead to confusion, disappointment, and regrets.
This list of “Don’ts” is based on personal involvement with nearly forty (40) acquisition transactions. Each and every one provided key learning about what works effectively and what should be avoided to have an effective and successful sales process for both the seller and the buyer. Every situation has both “do’s” and “don’ts” and this is no exception.
In the next and last post in this series I will provide a high-level summary and roadmap that provides a proven step-by-step process for you, the seller.
If you have any immediate needs or want to schedule a meeting to discuss your specific business, please don’t hesitate to email me today.