These are some of the most common misbeliefs about selling a business. Are you guilty?
You will make more money if you sell it yourself. Selling a business is time consuming. You need to market your business to buyers, manage incoming inquiries, identify serious prospects, meet with buyers, negotiate terms, and so on. Attempting to sell yourself may mean putting aside managing daily operations. Unless you’ve been through the sales process before, you may find yourself struggling through and dragging out the process. You may even scare away your best buyers. Statistically, sellers obtain higher sales prices when using a professional business broker.
Post it and they will come. Posting your business for sale on a listing sites may help get the ball rolling, but it is more than likely that you’ll need to do a lot more to find a suitable buyer. For one, you’ll need to ensure you are communicating the pertinent information about your company clearly and effectively. Even then, waiting around for your dream buyer to come strolling through the door may be overly optimistic.
Picture perfect, it’s a “no risk” business. There is always risk in business and buyers will be very conscious of the risks involved with purchasing your company. Understanding business risk in the eyes of the buyer is a crucial insight to both selling your business and manage your own expectations on price. Buyers will offset certain risks with lower bid prices.
Done deal, lickety-split. Selling to the right buyer at the right price takes time. It will likely take 6-9 months for you to find suitable buyers. Ideally, you’ll want to identify at least a few buyers that have serious interest in your company. There is also due diligence to be done after a buyer makes an offer and a letter of intent or term sheet is signed. The due diligence period is usually 30-45 days, then, if the buyer is still on board, you’ll need to schedule the actual closing, iron out any final details and get the deal done.
Selling is your jackpot. Most business owners have misconceptions over how much their companies are worth. Company value is often inflated in the mind of owners, reasonably so after giving years – maybe decades – of hard work. This leads to frustration, disappointment and quite possibly not being able to sell at all. You’ll need to get a grip on how much your company is really worth, a professional valuation is strongly recommended.