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.
1. 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.
