Common Pitfall Ownership Of An Enterprise Face When Selling A Business
Not Knowing The Value Of Their Business
It is expedient that every owner of business knows the value of their business, but the reality is that 65% of entrepreneurs don't know the value of their business. Valuation is a crucial step in bringing your business to the market. In short, you can't negotiate the best selling price of your business if you don't know the value.
Selling At The Wrong Time
The market opportunity is essential for acquiring a business, as it can directly affect the value of a business based on competition, demand, and economic factors. You don't want to rush to sell, but you also don't want to wait long. Finding this delicate balance is essential to maximizing the value of your business before you exit the industry. Professional M&A specialists can help you determine the right time to sell your business, as they have a solid understanding of the markets and have exclusive access to opportunities that can influence the timing.
Lack Of Preparation
The most common mistake made by business entrepreneurs during the sale of their business is not preparing adequately for it. There are various factors to consider before placing a business on the market. This includes detailed documentation on finance and profitability, contracts, personnel, information planning, and other matters that will affect value and sale-ability. Proper preparation can take months or years, depending on the size and complexity of your business. We suggest that you seek the aid of a professional M&A consultant to assist you with these details to ensure that nothing is left out.
Misrepresentation
You want to portray your business in the best way, but be careful not to misrepresent it to potential buyers. Avoid increasing the number, exaggerating the projections, or trying to hide the issues. Providing inaccurate information can damage a sale, and erode your reputation with other potential buyers, redirecting any possibility of agreement. Your honesty and transparency will also gain the trust of investors, increasing the likelihood of a sale.
Violating Confidentiality
When selling a business, or if you are considering to sell your business, it is essential to manage who knows what and when carefully. It will be conflicting if your team discovers the sales from someone other than you or your management team and thereby creating tension. Also, you do not want your customers to know and jump off the ship. Another reason to pay attention to confidentiality is that it can affect the sale if a buyer feels untrustworthy or receives damaged products.
Not Addressing The Transition Process
Selling a business is an important task, and it's easy to be so involved in the details of the sale that you might ignore the transition process that will take place when the transaction closes. You will need to work with the buyer to determine if you should stay with the business for a short time, to ease the transition, or if it will be an immediate exit. Other factors will affect the transition, including how it will affect the management staff and the team. It is essential to completely clarify transition plans to avoid confusion, frustration, and fear of the unknown.
Is It Time To Sell?
Enlist the expertise of Benchmark International M&A consultants as partners to achieve the highest sales standards for your business. Our team will make sure that you avoid the pitfalls that you may not know exist, and we are committed to organizing your goals and interests as best as possible at each stage of the process.