There are a multitude of reasons why a business sale can fall through. But, more often than not, problems can be boiled down to one of these four.
Buyers want to get the best bargain and sellers are looking to get the most profit. This fundamental difference between buyers and sellers can make it difficult to come to an agreement on price. The best way to value a business is to consider factors specific to the business as well as the current market. Consulting and working with an experienced business broker is one of the best ways to make your transaction negotiations more favorable. Your broker is interested in your success, but also knowledgeable in valuation determinants. Expertise is a powerful negotiator on your side.
It’s important to consider your business sale the same as any other business transaction to avoid making emotion based decisions. But it’s also important to keep in mind that your business sale is a transaction unlike any other. It will take much more effort and a lot more time, potentially more than any other transaction you’ve completed.
Looking for potential buyers or sellers for a business is a process that can take between three and six months. After identifying a qualified buyer, you’re looking at another one to two months for negotiations and sales processes to be complete. Running a business while managing this transaction can easily become overwhelming. To avoid burn out it’s important to go into the process expecting the challenge. It’s also important to have as much support and know-how as possible from the beginning. Be sure to check out my tips for avoiding common mistakes that contribute to burn out.
Leaving stones unturned
Right before hitting the finish line and signing all the paperwork, there’s one final hurdle: due diligence. This is the last investigation a buyer makes before finalizing the deal. Every stone will be turned. With each turn is a potential red light for the deal. With the help of your broker, you can be confident that this investigation will run smoothly. Your business broker knows the due diligence process and can advise you on how to organize and prepare prior to due diligence.
Finding the right fit
Every business has a unique company culture. This culture is a product of years of management, leadership, cultivation and work on the part of a business owner. Business owners looking to retire or move on to the next stage of their lives want to preserve the legacy and culture that they have built. If a potential buyer doesn’t fit into the company’s culture, the disconnect can be terminal. Thoughtful evaluation of potential buyers with the help of your business broker will yield the best results when looking for the perfect fit.