top of page
Search

The 5 Most Common Mistakes People Make in Selling Their Businesses


1. Preparation: The two worst (but most commonly used) tools for selling businesses are Annual Financial Statements (AFS) and websites. AFS are used to pay less tax while websites sell the features and benefits of products or services, not the features and benefits of a business in the eyes of an acquirer.


2. Committing to the first interested party: The most common horror stories you will hear from people who have attempted to sell their businesses often involve long, drawn-out discussions with one interested acquirer - the first one who showed interest. They were initially flattered by the interest and enthusiasm of the acquirer, but a lack of deal heat and nothing to ensure deal momentum, soon resulted in deal fatigue and immense frustration for all parties.


3. Due diligence before agreeing to deal terms: Due diligence should only be used by an acquirer to verify what they were given or learned during the deal discussion and negotiation process. However, many acquirers will attempt to convince you that they require full, in-depth due diligence before they can determine what the business is worth. This results in a painfully drawn-out process which is sure to result in disappointment!


4. Thinking that people with money are the best acquirers: Synergies with an acquirer, which often drives value, are most often found when businesses buy businesses, not when individuals buy businesses. You may also find that people with money are very conservative and do not part with their hard-earned cash very easily... mostly because they cannot be more successful with your business than you can.


5. Assuming that a competitor is the only acquirer that would be interested in their business: Competitors rarely pay a premium for businesses. Acquiring your business is often a grudge purchase for a competitor and their only interest is to remove you from the market. That said, if you can create the right level of interest from more than one acquirer, a competitor can be convinced to acquire at a premium in order to keep other players out of their market.


Comments


bottom of page