Top Ten Reasons Business Sales Succeed
1. The seller prepared his business for sale in advance
It is important to prepare your business for sale. Accounting information should be accurate, up-to-date and available on a timely basis. Redundant and non-core assets should be sold or transferred to a holding company, personal expenses should be minimized and at least identified, operations should be clean and organized, and equipment should be repaired and properly maintained. When selling your business, you want to have your best foot forward so that potential buyers see your business at its best. You should talk to The Summit Group BEFORE you make the decision to sell.
2. The seller was committed to the sale of the business
You should have a valid reason for selling your business. You may think that it is about time that you spend more time with your family, but you need to determine your financial needs and what you are going to do with your time. Don’t decide to sell your business because you want to test the waters and see what sort of price your business will command. Before you decide to sell, focus on your true objectives. That way, you will stay committed to the process to the end. Without a strong reason for selling, you may not be prepared to negotiate the complexities of the deal or willing to make the compromises that will inevitably be required to complete the deal. Any prospective buyer will want to know the reason for you selling your business. The more valid the reason, the more committed the buyer will be.
3. The seller placed a realistic price on the business
The value of a business is a fairly objective procedure. It is based on the historical financial performance of the business, its future prospects, the nature of the customer base, its operations and its competition. Prospective buyers tend to be sophisticated and knowledgeable. Many of them retain “buy side advisers” to assist them with the purchase. There may be a range of valuations but an inflated business value will turn off most buyers who will then turn their attention to other deals. The Summit Group will help you determine a fair value for your business that will represent a “win-win” price.
4. The seller stayed focused on running the business during the sales process
You should know right now that selling your business is time consuming, stressful and sometimes emotional. The sale of your business will place tremendous pressure on your time and you will be required to make decisions and compromises that you may not be comfortable with. At the same time, you have to continue to run your business effectively and profitably. The Summit Group will alleviate the pressure on your time and help you make prudent and reasoned decisions. We will be your partner and your trusted adviser.
5. The seller (or buyer) was flexible and realistic
Many business owners are used to being in control and getting their own way. Many purchasers have the same personality trait. There will by necessity be compromises in the sales negotiations. At times, the seller has to put himself in the position of the buyer and ask: Would I agree to this if I were buying my company? Sticking to hard line positions is rarely a way to get deals done.
6. The seller was responsive
The sales process is extremely fluid. During the due diligence process there can be an incredible demand for business information. Getting that information to the prospective buyer will move the process along to its conclusion. A lack of responsiveness can stall a deal and can lead to the termination of negotiations. The Summit Group will be able to anticipate what sort of information the buyer wants so that the required information is available before it is requested. This will keep the “momentum” of the deal moving forward.
7. The seller made himself replaceable
The last thing you want is the purchaser to form the impression that the business can’t run profitably without the current owner at the helm. Begin to assemble a management team that will be capable of success after the owner decides to sell the business and depart. It is critical that the buyer’s perception is that the business will continue its profitable operations with or without the present owner’s involvement.
8. The seller was part of the sales team
No one knows your businesses as well as you do. The seller must be part of the sales team from the beginning and assist in determining prospective buyers, providing information and insight for the marketing materials, and taking a leadership role in convincing the buyer that the business is worth buying.
9. The seller used experienced advisers
Mergers and acquisitions is an area that requires specialized and seasoned expertise. Your corporate lawyer or accountant my not be the best adviser to assist you in selling your business. Inexperienced advisers may be reluctant to give their clients advice to take any risk, whereas seasoned advisers who have been through sales negotiations before will know what is reasonable. The Summit Group can help you find the best advisers who are experts in this area.
10. The seller used an experienced business broker
The Summit Group will be there to advise you through the entire process — from the initial housekeeping, to determining a fair value for your business, to preparation of the marketing materials, to selection of qualified buyers, to due diligence, to presenting and assessing offers, to negotiating the ultimate terms of the sale and closing the transaction. We will ensure that the process continues to move forward and that the seller is comfortable. The broker and the seller become a team with the common goal of successful completion.
