Some circumstances that might block a successful business sale are outside of our control. These include things such as the cost of financing, the general state of the economy and the political or regulatory climate. Other conditions are within our direct control. It is crucial that a seller does his utmost to manage these factors.
Asking Price Too High
There is a fine line between maximizing value and overplaying your hand. Thus, driving away potential purchasers. Unrealistic pricing is the number one reason businesses don’t sell.
Many sales have been torpedoed by unreasonable terms. Some owner financing is part of nearly every sale. The higher percentage of the total sale price an owner is willing to carry, the more likely to complete the business sale successfully.
Poorly prepared financial statements and sketchy records red flag a buyer. This tells him either the business is poorly run or is not being truthfully presented.
Poor operational controls or poor reporting systems can reflect poor management structure. It’s June – Are your April and May financial reports complete? How are your accounts receivable and payable reports? What about your inventory reports?
Are you selling or testing the market? Testing the market can be a risky strategy. It can put your business reputation at risk. Testing the market can compromise confidential business data. There is also the possibility of litigation from a prospective buyer.
Personality issues have thrown a monkey wrench into many business sales. The problem can be the seller, the buyer, the investment banker, one of the attorneys or an accountant. The ability to manage all the parts of the transaction while maintaining harmony between all the parties is paramount.
Every buyer brings his own unique point of view to the table. Some will be comparing your business with others on price alone. Others are looking at the need for additional capital requirements, and overall return on investment. The ease of operation, location, growth potential and cash flow possibilities of the business will attract others. Making the sale means maximizing the upside, minimizing the downside. If you would like more information on selling your business, download our FREE Sellers Guide.