Half of all business deals fall apart during the due diligence stage. Most of the time, it’s because a seller hasn’t disclosed something about their business to the buyer that is uncovered at a later date.
But even if you reveal everything about your company upfront, there are still a lot of ways to kill the deal. You have to ensure you’re putting your best foot forward. Let’s take a look at some of the common mistakes owners make when selling their businesses.
1. Not Doing Your Due Diligence with Financial Records
When you are getting ready to sell your company, don’t rush to put it on the market. Make sure that you take the time to talk to experts and advisors and do your own due diligence when evaluating your business’ financials.
The sheer volume of detailed information that you will need to gather and verify so that you can provide it to the buyer is immense. Make sure you are painting the most accurate portrait of your company possible.
Buyers will put your business under immense scrutiny. If you send them the wrong information, it could make the whole process take a lot longer. In that time, your buyer may get cold feet or move on to another opportunity.
2. Failure to Create a Replacement
If you have been running your business as its owner and are part of the day to day operations then when you leave, your company will become weaker. For a buyer to feel secure about purchasing your business, you need to train a replacement for yourself.
This will have to be someone who knows all of the inner workings of your business. They will be the primary team member ensuring the transition to the buyer goes smoothly. By promoting from within your company, you can be certain it will be in good hands.
3. Lack of Diversity
Many buyers like to purchase businesses that have multiple revenue streams. If they feel like all of your income is coming from the same venture, client, or product, it can make buyers nervous.
Before you put your business up for sale, you should strategically diversify your company’s revenue streams as much as possible. Make sure you have multiple clients and a well-balanced portfolio.
4. Poor Future Planning
Just because you’re selling your business, shouldn’t mean that you can’t see a future for it. By creating a five-year plan for your buyer, you can set them up for success.
Put together some blueprints for what you think the next five years could look like for your company. Even if they don’t end up using your plan, letting buyers know about potential opportunities for new business and continued growth is always a good thing.
5. Letting Your Team Fall Apart
No one wants to buy a business that doesn’t have any employees. It’s important that you lay the groundwork for an easy transition. Talk to everyone on your professional team and make sure they are ready to play ball.
Be transparent with them and use no uncertain terms. Good communication is the best way to ensure they are committed to working for the new owner.
Planning for Your Business Sale
A business broker can steer you through the process of selling your business. They will help you come up with a plan that can be tailored as you come across any snags.
Having the right team behind you is crucial to a successful closing. We would love to help you navigate this process. Contact us today for a consultation.