Don't believe These Myths About Selling Your Business
Brad Smith • February 4, 2020
When successfully selling your business, you should be educated with the process. Beginning the process, you should surround yourself with professional experts including business brokers or agents which help to lead you along the way. There are many myths about selling a business and some may cause a deal to fall through.
Stay alert and be aware of the common misconceptions related to the process of selling your business.
Myth #1- My current advisers will help me.
Your CPA and attorney may be great at their profession, but the question is whether “what they do” is deals. Your attorney and CPA are competent, but they don’t know much about the way of M&A transactions. If your adviser doesn’t list M&A as a specialty area, they probably dabble in it from time to time. They may or may not be good, but you won’t know until it’s too late.
Selling your business is a one-shot deal. Good advisers will admit that they might not be the one for the job and they may refer you to M&A specialists.
Myth #2. My Business is different
Every business is unique in some way and no two are the same. This myth deals with the thinking that we are the exception and the rules don’t apply to us and the business. One example is the endowment effect which is the notion that what we own is worth more than its market value simply because we own it.
Myth #3. Selling is about getting what I want.
When selling your business, it’s easy to have the mindset that you aren’t going to walk away from a lifetime of work unless someone makes it worth your while. A buyer can give you what you want or hit the bricks, right?
Wrong. Unless you want to run your business indefinitely.
If you want to approach a negotiation with a take-it-or-leave-it attitude, then you should scrap the idea of selling your business. Buyers and their teams are smart and will not waste time with “unreasonable” sellers who don’t acknowledge that M&A is a two-way street.
Your sale goals are relevant, and you will want to work with an M&A advisor to identify your primary goals for a sale before going to market. The buyer will have to clear goals for an acquisition and you will have a hard time closing a transaction unless you understand and acknowledge the buyer’s point of view.
Myth #4. Ill be able to sell when I’m ready.
This myth leaves a trail of missed opportunities resulting in personal and financial disappointment.
When timing to sell your business there can be more to it than deciding that your ready. You need to consider your business and the industry market.
- Is your business ready to sell?
- Is it a good time to sell in your industry?
- Is the economic climate good for selling a business?
You will want to get started with your exit strategy before you are ready to sell your business because there are many pieces that will need to be in place for that to happen.
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