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8 Common Mistakes When Selling A Business

Lack of preparation.
Missing or inaccurate documents create buyer anxiety - which can reduce the price they are willing to pay.

2. Failure to keep appropriate information confidential.
There are few things more potentially damaging to a company than premature rumors that it is up for sale. For that reason, it is critical that a company's identity and location be kept strictly confidential during the initial stages of a buyer search. Once it is established that a potential buyer has the proper qualifications, financial resources and motivation, additional information about company operations can be provided . . . but only after the buyer has executed a legal agreement to keep the information confidential.

3. Inability to devote appropriate time.
Even under the best of circumstances, the process of selling a company takes time. Most owners simply are not able to devote the necessary hours to the process while continuing to manage their business day to day. The result: unnecessary delays that cause many transactions to fall through.

4. No marketing plan.
Simply put: selling a business to the optimal buyer at the optimal price within the optimal time frame does not happen by itself - it requires a comprehensive, systematic, professional marketing plan.

5. Lack of re-adjusted financials.
Most business owners seek to lessen their tax burden by minimizing the earnings reflected on their financial documents. In order to show the true value of the company, financial statements should be re-adjusted so they accurately reflect the owner's cash flow for the past three years.

6. Failure to address weaknesses.
Every company in every industry has both strengths and weaknesses. The time to identify both is at the outset of the process - so that weaknesses can be pro-actively addressed and managed before they lead to a lower selling price.

7. Lack of a "big picture" perspective.
Sometimes owners are not aware of all of the trends regarding buyers in their industry. For example, there may be qualified and, especially, motivated buyers coming from outside the industry or outside the geographic region. It is important to attract as many of these motivated buyers as possible because: if you have only one buyer, that buyer has you.

8. Failure to assemble a professional team.
The skills and knowledge necessary to own and operate a business are not the same as those required to navigate the many details of selling it. That is why the only way to assure the most advantageous and timely transaction is to work with a professional business brokerage team!


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