“I’ve decided to sell my business – what are the pitfalls to avoid?”
Problems and pitfalls will arise if you fail to provide careful consideration to the selling process when you decide to sell your business.
With this in mind we have prepared a list to help ease potential frustrations and to help you gain a greater understanding of the whole procedure.
Whether you opt for an owner-seller approach or utilise the services of a company broker like ourselves, bearing in mind the tips below will assist in getting the best deal possible for all parties.
For small business owners especially, lack of preparation is the usual mistake. This is why we would like you to take advantage of our free and confidential discussion about the sale of your business before you are actually ready to sell. This gives you the chance to 'prepare to sell'. Taking a good look at the business, the financial aspects, staffing issues and all the other points that will have both a positive and negative impact on achieving the best deal for both parties. Once the preparation is completed, you are ready to market the sale of your business.
Confidence is of course a good thing, but it can be a hard blow if the confidence of the value of your business is misplaced. Being too confident about the value of your business could also restrain you from being open minded to ideas that could increase the value of your business. We will be realistic about the value of your business and we will use our great deal of experience to make suggestions that will increase your expectations.
Most business owners would acknowledge that using professionals such as solicitors, accountants and other sector specific consultants is sensible, yet many feel they could save the broker's fee and sell their business themselves. What business owners fail to take into account is the time spent in successfully running their business becomes much reduced. Taking the eye off the ball can have an adverse effect on the very business in which they are trying to achieve the best price.Our marketing and negotiating experience usually achieves a ten to twelve per cent higher sale price for your business. Your time is best spent doing what you do best - running your business, not concentrating on something that is alien to you..
Business owners can understandably lack confidence in testing the seriousness of prospects showing an interest in purchasing your business, being fearful of discouraging the prospect. Our experience has shown that it is important as it brings the prospect further into the sale. It is standard for the interested buyer to sign confidentiality and financial non-disclosure agreements (NDA) to enable them access to vital business information, central to your companies processes.
Although it is completely understandable that a vendor wants to put their business in the most favourable light, the vendor must also be very wary of being open to the accusation of misrepresentation. No matter how much you are tempted, it is also the best policy to be scrupulously honest. Honesty breeds trust and all deals require trust.
Sellers lacking experience often set too high an asking price before a realist value has been assessed. Take the time out to perform a careful valuation of your business, being aware of what the market will bear will put you in a much better position to reap the rewards of a quicker and positive sale.
It is important to consider alternative methods of divesting yourself of your business to increase the overall consideration and avoiding onerous tax liabilities.
Failing to keep the sale of your business close to your chest can be disastrous. An uncertain future can negatively affect turnover and staff moral. Marketing the sale of your business in a highly confidential manner is a must to maintain good sale prospects.
Remember to include the discussion about the transition as the buyer is likely to require you to stay in situ for a period of time and this may not fit in with your plans. Obtaining a satisfactory agreement between the vendor and the purchaser of the business will ensure that all will be well after signing and closing the deal.
Ensure all key terms of the deal are included in the heads of terms, which should be signed by both parties before detailed due diligence is started. This avoids late surprises in the deal.
