How to Avoid These Common Mistakes When Selling Your Business
Posted on 18th May 2022 at 13:57
You have taken the difficult decision to sell your business but the process of selling the business can be complex and there are many common mistakes that business owners make that can cost them money. Here are some tips to prevent you from falling foul of these mistakes.
Selling your business is more complex than selling your house and you need to do more than put up a sale board and tidy up the rooms to make it more attractive. You need to think ahead about selling your business and put steps in place that allow you to organise the business and get it into the best financial position. You will also need to prepare a range of information about the business which will include financial, legal, HR and contract information as the buyer and their solicitor will want to view this. Preparing this information in advance of going to market can shorten the length of time it takes to reach the completion of the sale.
Many business owners know their business really well and may feel the best place to sell it but there are advantages in bringing in professionals to support you in selling the business. You should seek advice from professionals before you put your business up for sale. It is a good idea to involve your accountant and solicitor from the outset so that they can ensure that you take the right steps. A good accountant will help you to value your business and can suggest ways to improve the value. The accountant and solicitor will be aware of sale/purchase agreements and what problems may arise and how some can be avoided with advance planning.
Marketing it to the right audience
Often businesses fall foul of not marketing their business sale widely enough which can result in a lack of offers and not being able to drive competition. It can often be easy for the business owner to approach someone they know in the industry that might be interested to get a quick sale. BCMS, a business sales expert, claim that if there is sufficient competition early in the process it will result in a better range of offers with the highest being double the lowest.
Selecting a bad broker
It might seem sensible to get a broker to handle the sale of the business for you, but it is important to select the right broker. You should check the broker’s references and contract clauses to ensure that you are happy with their terms. We have seen cases where businesses have been tied into a contract without being able to leave after an unsuccessful period and the business can’t be sold at the price agreed.
If you hire a broker that isn’t the end of your role in the sales process as you will need to provide information to potential buyers, hold meetings with them and do presentations. This is on top of keeping the business running and continuing to motivate your staff so that the business doesn’t see a downturn during the sales process which can take six to 12 months.
Providing transition support to the new owners can add a lot of value to the buyer as it can provide some expertise and continuity in the initial period to assist them in getting to know the business. Offering this transition support can reduce the risk to the buyer and lead to a better price.
With all matters of this kind, confidentiality is important to all parties, and you should ensure that no accidental breaches of confidentiality occur. This can help prevent issues with customers and staff who may react differently if they knew the business was for sale and to who.
If you are considering selling your business, get in touch with us to discuss how we can support you in getting the most for the business.
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