Are you selling your business? Watch out for these cardinal mistakes

Are you selling your business? Watch out for these cardinal mistakes

Are you selling your business? Even the most astute of sellers can go wrong when there is no proper due diligence done, the importance of which we have already seen in one of our previous blogs. This week let’s discuss some of the typical mistakes that a seller can commit to himself and their repercussions in the selling process.

Staying in the buyer’s shoes:

It is not uncommon for a seller not to consider things from a buyer’s perspective during the selling process. How often does a seller prefer to stay in a buyer’s shoes? There are two important questions that a seller would need to ask before initiating the sales process.
1. What information should I expect to get if I were to buy this business?
2. How trustworthy will be this information so as to help me close the deal?

Though there are several questions that would take any seller closer to his intended goal, the above-mentioned queries form the core of selling process. The more any seller tends to shift away from the interests of the buyer, the less likely will the deal materialize.

Overlook business during the sales process:

Most sellers overlook business  during the actual sales process. This may have a negative connotation over the long haul. It is important for the seller to maintain their day-to-day operations as effectively as possible.  Business deals can crumble anytime, and this holds true whether the acquisition process involves a small business or corporate firm.

Failing to do homework:

Any seller who’s really serious about deal closure shouldn’t fail to do his homework, that is identifying, preparing and organizing the required documents, certifications, approvals and reports from a buyer’s perspective. The seemingly long list of must-haves should also include financial statement, environmental studies (if any) and business projection among others.  Will you as a buyer prefer to purchase a business that is in disarray? The point here is an organized business will immediately draw the attention of a prospective buyer.

Business value conundrum:

What is a good price to sell off your business? The too high or too low state of estimating any business requires the seller understanding its real value. Good deals often get blown up because of unrealistic value during the selling process, fuelling desperation and perpetuating exploitation, thereby leading to conflict of interests. Therefore, it is important for the seller to know the value the market will hold for him at present and in future. It is advisable for both the buyer and seller to work with an expert business broker or M&A advisor to avoid a range of issues that could possibly interfere with the trading process.

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