If you're contemplating selling, here are some common mistakes to avoid.
1.
Overestimating the value of your business.
Your
price should be based on the fair market value of the business in its current
form. Buyers won't care about the work you've put into building your business
or your unique vision for its future.
2.
Failing to account for the nature and make-up of your business.
The
values of most businesses proceed from a mixture of variables. If your business
includes significant equipment, real estate, intellectual property, or other
such assets, their values should be separately established before being
factored into the overall price. If you're selling a service or professional
firm, much of its value may depend on the experience and skills of your
managers and employees. In such a case, the price may vary according to the
expected retention of key individuals.
3.
Failing to base your sale price upon independent appraisals.
Even
if you think you know the value of your business, you should obtain two or more
outside appraisals from professionals familiar with your industry. If the
appraisals conflict with your opinion, they'll provide a much-needed reality
check. If they confirm your opinion, they'll become a useful sales tool.
4.
Not hiring a professional business broker to handle the sale.
Owners
are often too personally invested (and/or eager to sell) to effectively
negotiate sales of their businesses. A broker familiar with your type of
business will know what issues are important to buyers and what characteristics
to emphasize or de-emphasize, without becoming emotionally involved.
5.
Neglecting to work with the buyer to ensure a smooth transition.
Nobody
likes being thrust into unfamiliar circumstances without preparation. Notifying
your managers, employees, and customers in advance and doing all you can to
allay their concerns will serve your own best interests, as well as being the
honorable thing to do. Discontent on the part of any of the affected parties
could result in conflicts, reduced revenue for the buyer, withheld sale
payments, and litigation.
6.
Being unwilling to help finance the sale.
If you're unwilling to take back a note,
your sale price is limited to the buyer's cash and ability to obtain outside
financing. At best this could limit the number of potential buyers, and at
worst it could limit your sale proceeds. (Conversely, if you finance too much
of the sale price, you'll increase the risk of default.)
Selling your business is too important to
attempt without professional help. If you're considering selling, call us at (518) 798-3330 for
an appointment to help formulate your plan.
