If you're selling a business for the first time, there are several potential pitfalls to navigate in order to maximise sale value while ensuring a positive experience for the buyer. Here are five common mistakes that sellers often make and some guidance on ways of avoiding them.
Timing Is Crucial:
While it's impossible to predict the perfect moment to sell your business, failing to plan ahead or waiting too long can lead to missed opportunities. A recent study showed that 50 per cent of sales happen following unexpected approaches from buyers, meaning that owners without an exit plan in place already risk failing to maximise the value of their sale.
To avoid this, prepare well in advance by maintaining up-to-date records, documenting your business history and assets and creating a sales portfolio. When the ideal opportunity arises, don't hesitate—act promptly to seize it.
Seek Expert Assistance:
Selling a business is a complex task that requires a team effort. To secure the best deal and a smooth transaction, you'll need the right experts on your side to provide advice, guidance and insight into how to make a profitable sale.
Depending on your business type and industry, these experts may vary, but they will typically include a broker, accountant, and lawyer. Choose professionals you trust or seek recommendations if needed.
Promote Your Business:
Even if your business is well-known in your niche or you have valuable industry connections, failing to leverage these assets in promoting your business sale can lead to missed opportunities and a sale that doesn’t meet your valuation.
Consider that potential buyers may come from outside your industry or be experienced entrepreneurs seeking a new venture. Effective promotion, both online and through word-of-mouth, can attract a broader pool of interested parties.
Value your Business Correctly:
Determining the appropriate price for your business is challenging but crucial. Seek expert advice to accurately value your company before marketing it for sale.
While you will, of course, want to generate the best possible sale price for your business, overpricing may waste time and resources and put potentially interested parties off. Underpricing, on the other hand, can result in significant losses. Aim for a fair and competitive price and remember that you may need to be flexible and open to negotiation.
Find the Ideal Buyer:
Even if you want to close the sale process quickly, rushing to accept the first offer or not thoroughly evaluating the buyer's suitability can lead to unfavourable outcomes – both for you and for your business post-sale.
Whether you plan an extended hand-over or simply want your business to thrive under new ownership, research your potential buyers – remember that due diligence goes both ways during M&A. Consider their experience, willingness to learn, and the terms of the sale contract. Investing time in finding the right buyer can benefit both parties and ensure the continued success of your business.