Exit Strategies
Five More Deal Killers to Avoid
Selling a business is an obstacle course of preparing your business for sale, finding a buyer, negotiating and making it through the closing without a hitch. But you can make selling your business easier if you avoid more deal killer mistakes.
- Not being up front about problems with the business
Most buyers will do their due dilegence and will find out about problems. And if they hear about them from a third party and not you, they may wonder what else you are hiding. Moral of the story – Be honest and up front about everything.
2. Stretching the truth.
A smart buyer will see through your hype when financial statements and contracts don’t live up to the story. In fact, this will give the buyer a legal excuse for defaulting on loan payments if the business fails and they can prove your misrepresented the facts.
- Taking to long to respond to questions or offers
- Reply immediately, especially in our rapid-fire email world. By making a buyer wait longer than a day, may drive them away.
- Also, maintain deadlines. If you promise information on financials, etc., keep your word and get them to a buyer in a timely manner.
- This is an important reason to hire a business broker to sell your business – it gives you time to run your business while the broker takes care of paperwork and buyer questions.
- Waiting too long to qualify a buyer
If a buyer is interested, make sure they fill out a non-disclosure form and a confidentiality agreement. That way they can look at your listing. In most cases a buyer won’t mind signing these documents. If they do, they probably aren’t qualified to buy afterall.
- Refusing to negotiate
Buyers see the asking price as a starting point for negotiations, so expect some give and take. Most sale prices end up around 80 percent of the asking price.
General rule: if the buyer is qualified both financially and business wise, keep talking.
Finally, don’t let numbers alone kill a deal. Talk with an accountant or business brokers to evaluate offers. If the tax implications favor you with a lower offer, it might be better to move than wait for a higher offer.
More information on this topic can be found in “Selling Your Business for Dummies,” by Barbara Findlay Schenk and John Davies, CEO of Sunbelt Business Brokers.