About two years ago I sold my business and learned more in that transaction than I ever did going to business school. Negotiation replaced John as my middle name and as I worked through the due diligence process I saw how important it became that the next 30 days would be the difference in many zeros on the end of the exit I might get.
So when I came across this article on “10 Mistakes to Avoid When Selling Your Business” and saw the following list:
- Insufficient Preparation
- Overconfidence
- Unwillingness to Leverage Professionals
- Taking a Hands-Off Approach
- Failure to Pre-Qualify Buyers
- Misrepresentation
- Pricing Problems
- Only Entertaining All-Cash Offers
- Breaching Confidentiality
- Failure to Address Transition Issues
Over the course of the sale of my business I probably made half of these mistakes. Mostly it was around not having everything together and then once I got a professional to help me I didn’t stay as engaged as I would have in the past. I don’t know if it was burn out or wanting to move on to the next thing. Maybe a little bit of both. The other thing I didn’t really do well was look at the transition. I tried to sell it, stay for a few months and move on. Ultimately, that choice left money on the table and the culture of the acquiring company made it hard to maximize the full value of the business once it was acquired.
I would add a #11 to the list – Find a good fit – If you are lucky enough to have multiple parties interested, you are trying to balance maximizing the valuation with finding the best place that the business will thrive. Because rarely you will have an all cash deal that you can walk away from the minute the ink is drying on the page. You will likely have to stay and meet certain numbers to get the money in the deal (called an earn out) and then walk. Culture was not mentioned in point #10 but if you are to find a home for your business, it needs to be a happy home.
I would take a read of the full article over at Entrepreneur.com and see if you might be at risk for committing any of these mistakes.
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