Pitfalls to Avoid When Selling
While this list is not all inclusive,
just remembering these ten potential pitfalls will move you along the way
toward achieving a successful transfer of ownership.
1. Not Minding the Store
The most important point to remember
when selling your company is to keep it running as if you will always own
it. More sales of mid-size companies fail because the underlying business
takes an unforeseen turn for the worst. In a majority of these cases, the
owner becomes preoccupied with the sale process and loses sight of the critical,
day to day management issues. Considering that a sale can take anywhere
from five to nine months, the sellers distraction from his business can
be fatal to a deal, particularly during its latter stages. Late in the negotiation
process, a buyers adverse reaction to negative reports of even a relatively
minor problem could determine the entire transaction.
2. The Unfocused Effort
Time always works against you
in a sales process. The longer a transaction takes, either because the owners
are finding it difficult to make critical decisions, or potential buyers
are protracting the process for their own purposes, the greater the tendency
for significant problems arise. The sale process will always take some unexpected
twists and turns, but in most situations, a good team of advisors and management
can usually prepare contingency plans. The key is to be well prepared, confident
and decisive, and to have clearly defined objectives.
Below is a summary of some of
the potential hazards of handling the sale of your own business:
* Limiting the buyer universe:
An owner will tend to focus on only one to two types of buyers, usually
direct competitors or customers. Unfortunately, such an approach could very
likely leave out many potential buyers not readily known by management.
For example, interested buyers might be companies using the same distribution
channels, but with vastly different products, or financial buyers, such
as equity groups or individual investors.