Selling a business is complex and requires a great deal of planning to determine what approach works best for your company. How will you identify the best prospects? How will you get the word out without letting others know too soon? What is the value of your business, and how do you get back what you put into the business?
Many challenges can hinder the sale of your business, and doing it alone makes the process more drawn out and complicated. Here are the five mistakes you’ll make when selling your business and how to avoid them.
1. Not Getting a Business Valuation
You want the highest value for your business, but how can you achieve that ideal price when you did not receive the proper valuation?
Aiming too high can do similar harm as aiming too low. You will not win over lost buyers with a price drop. A business valuation shows you where your business stands and areas you may want to address before putting it on the market.
2. Not Seeing Flaws as Opportunities
No business is perfect, and flaws can present opportunities for investment and growth. Buyers want to purchase a sustainable business. However, many buyers appreciate a challenge and see potential where you may feel burned out dealing with the challenges.
You can take steps to refine your processes and policies now. Becoming re-acquainted with the ins and outs of your business will help you solidify and make the final deal stick since you will be ready to answer all questions.
3. Hiring the Wrong Advisers or None at All
You may think that hiring a general lawyer or accountant will be enough to take care of your legal obligations. It is not enough. Hiring expert mergers and acquisitions advisers will ensure that you get the right value for your business and conduct your due diligence thoroughly.
The right advisers will guide you through due diligence and any human resources hurdles. You hire an M&A advisory team to see you through the beginning, middle and end of a sale while the wrong advisers will not know how to handle obstacles and potentially harm the value of your business transaction.
4. Giving Away the Sale to Employees Prematurely
Never tell employees that you plan to sell your company until the deal is closed. The senior level staff that makes up your advisory team can accidentally disclose the fact that the company is on the market, so it is important to stress that all involved in the deal do not disclose information without your approval. This includes keeping data and paperwork away from prying eyes and only discussing the topic in private.
Corporate actions, such as quickly shutting down whole processes, product lines or departments, naturally send employees into a panic. Is the business shutting down or being taken over? What is happening? Your employees are a highly valuable asset, and the retention of your talent costs less than the new buyer having to replace them.
While some turnover can be expected in an M&A, strong businesses plan for transparent and supportive transitioning — but after the deal is made to avoid unnecessary panic. An M&A can create opportunities for employees, but giving away the details too soon can quickly disrupt the positivity of the deal.
5. Failing to Make an Exit Plan
Your exit plan is linked with your plan to sell the business. Would you like to be a consultant? Do you plan to start a new business or retire? Do you care or worry about the continuation of the company mission after the sale?
All of these questions factor into the type of buyer you are looking for and what you will do with your life once the deal is made. You can decide to sell your business and make an exit plan at any stage of your life and career. That said, it is best to sell a productive business with a solid reputation.
No business is perfect, but avoiding these five mistakes will make selling your business easier and better for you, the buyer and your employees. Start with a business valuation and learn to see flaws as opportunities. Don’t give away the news too soon to employees to keep up morale.
Hiring the right advisers will ensure a successful M&A and that you achieve the value that you put into your business. Value is linked with quality, and you should take every step with care.
Contact Sun Acquisitions to develop a plan to help you achieve your M&A goals. We can confidentially market your business to our extensive database of buyers and will stay with you when the deal closes.