17 Feb Five Reasons Why Your Business Won’t Sell
Successfully selling your middle-market company requires tenacity, gumption and often a great deal of hands-on expertise. For those looking to jump into selling their company, I’ve compiled a brief, but hopefully helpful list on “don’ts” for selling and marketing your business when it comes time to take it to market. Lately the concern has been “will my business sell at all?” In fact, many have discontinued their intentions to put their business on the market, while others site with a vacant “For Sale” sign on theirs, just hoping for a buyer—any buyer—to come along and sweep them off their feet. The pointers below are not meant to be extensive, but should be a bit helpful on getting your business to sell for the largest sum possible.
- Start talking price from the outset. I know we’ve rehashed this one ad nauseam, but for good reason. Not being the first to show your cards is important when you are attempting to keep the power in the buyer/seller relationship. Just for your information, it is the seller who should always keep this power. For more information on this please visit our specific post on not mentioning price when selling your business.
- Inaccurate or incomplete information. If the data in your Confidential Business Review (CBR) is inaccurate, it could be the start of your demise. If the expectations of the buyer is based on incomplete or inaccurate information it will not bode well for you when it comes time to get to the final rounds of the negotiations. Believe me, working on
- Sharing of confidential information. If you have not already secured a hermetic Confidentiality Agreement (CA) from the intending buyer, be sure to get an experienced M&A attorney on your side to get this done quickly. If you do not have this document in place, a violation of it could cause not only the loss of the particular violator, but any other potential buyers down the road who have now seen your dirty laundry strewn about. Getting a CA put together out the outset can protect you from a great number of “woahs” down the road.
- Lack of understanding. Business owners know their business holds value, but we see countless company owners and managers time after time, undervaluing (many times because of a lack of understanding) some of the key assets of their enterprise. This lack of understanding may not be the demise of the sale itself, but will certainly put the seller in a place where he/she will not be able to maximize the sales price for the company. This is a lose/lose for the seller.
- Improper networks and marketing prowess. Marketing prowess in the sale of a business as it is in the sale of any other product or service one may be taking to market. This includes the ability to take the business and pitch it to potential buyers, which could include Private Equity Groups (PEGs), individual sellers or publicly-traded companies. Obtaining top dollar for your business often means finding buyers in potentially obscure places. A good advisor can be helpful here. Such an advisor generally has a network built which can be helpful in getting the business sold. Remember though, today’s technology is helpful in getting businesses sold. The internet’s reach has really helped out on this one, but a lack of understanding there can also be painful.
Preparing to sell can be difficult, further exacerbating the issue can be very easy if you fail to adhere to at least some of the aforementioned “doctrines” of selling your business. Or perhaps they should be counted as ways NOT to sell your company. While we don’t suggest going it alone, I hope this small bit of advice will be helpful if you are looking to sell your business anytime in the near future. That future is looking much better by the way, especially as the market begins to gather steam again.