I’m going to outlay some points on how not to market your business. Sometimes it is good to have a “how to” discussion, but on the flip side, sometimes it is even better to have a discussion which is more of a process of negation. In some respects it’s a bit like online marketing: you have “dofollow” and “nofollow.” Tips to sell your business could be classified similarly: some of them you should adhere to and others are not such a good idea. If you are trying to go it alone when selling your company, you may first want to consider a few of the pointers mentioned in this post before you proceed.
Because selling your business often requires a big time commitment, which could mean anywhere from 8 months to as long as two years before you find a prospective buyer, it is often wise to keep that in mind. Oftentimes company owners or managers are used to quick-pace results in the business itself. Not so in the selling process. Keep that in mind when going through any of the advice mentioned here. It may give you the opportunity to avoid a blunder before you actually stumble and make one.
It would be nice to say your company does far better than it does to get a higher price for your business, but this can only happen in one of two ways: either you sell more products or services or you fudge the numbers to make your business look like it is worth more. When you create your business documents, including your Confidential Business Review (CBR) keep in mind this document will be in the hand of any potential buyers after they have signed a Confidentiality Agreement. To have any intentional errors in the CBR is completely unethical. The document must be completely accurate and up-to-date given the time and circumstance of your business sale. Don’t give incomplete or halve-truths in any of the documentation either. This can come back to bite you in the butt later. Keeping it above board is of utmost importance. The deal could blow up in your face if you ignore rule #1.
Talk About Price
While you want to be as honest and forthcoming as possible, it is unwise to mention price initially. I would liken it to a game of poker where you don’t want to be the individual who shows his/her hand first. Middle-market business owners looking to sell their businessshould not show their hands too early. It’s a case of “the first liar doesn’t have a chance.” Always let the potential buyer start to discuss price. It is the first step in business sale negotiations. When it comes time to negotiate the price, if the buyer is the one who first offers, then negotiations can actually take place. If sellers begin at a specific price, the buyer now knows where to work down from. It is always best to make sure the price is not mentioned–at least by you.
Work Without a CA
With the prevalence of privacy breaches in recent years, it may be easy to say that the hardest, but more important thing to protect these days is personal privacy. This is especially true when it comes to selling of one of your largest assets, your business. This is the primary purpose of the Confidentiality Agreement (CA) which was discussed previously. You may want to have a knowledgeable M&Aattorney put together the CA for you. This document will protect your company from potential issues, especially if the CI is violated by a conflicting party. Protecting your assets in the event of a business sale generally means protecting the privacy of your company using a Confidentiality Agreement.
Fail to List Intangibles
Oftentimes companies hold some type of intangible assets which set them apart from others in the market or the competition. Many times these assets are housed in the managers themselves who know the industry inside and out and have a very hands-on expertise of what it is you are specifically selling. If you manage your own business, this could relate directly to you. However, there are potentially other assets which are not on the balance sheet of your business which could be referred to as “Goodwill” which will be important to take into account when you are looking to sell. These items, while not on the balance sheet, should be listed with the CBR. If you fail to do this (pardon the use of another poker analogy) you are leaving money on the table. Make sure the buyer really understands what you the seller is intent on selling.
Be Too Pushy
This can go without saying, but sometimes companies can be too anxious to sell their business and often do not have the patience to get the best price possible. This can cause some to become anxious and overly pushy when they attempt to take their business to market. “Don’t be that guy.” Keep a semi-low profile. Frankly, if your business is worth its weight, it will outlast whatever punishment or critique other individuals or entities may have toward it.
You spend your time building a great business, we’ll spend ours helping you sell it. Hopefully you are able to keep some of these thoughts in mind when it comes time to sell, otherwise you could make some real blunders in the process which could cost you some cash.