It is always important to try and put yourself “in the other person’s shoes.” This fact is of paramount importance when dealing with prospective buyers. Thinking like a prospective buyer could, in fact, be the difference between selling your company and not selling your company.
It is easy to think that because everything is going smoothly with the sale of your business that the tough part is behind you. That may be true, but then again there could still be problems ahead. Issues can come up at a moment’s notice when either your prospective buyer or his or her advisor raises a red flag. Additionally, the larger the business for sale, the greater the complexity.
The “Little Things” that Could End Up Quite Big
Financial statements are of considerable importance when selling your company. Quite often you’ll see contingencies regarding financial statements and/or business tax returns, so be ready and organized. Lease issues is another common category for contingencies and an area of concern. Sellers and buyers tend to make a lot of assumptions regarding the lease which is not good. Falling under the lease issue umbrella are topics such as whether or not the seller needs to remain on as a guarantor or issues regarding the condition of the property or space and who is responsible to name a few. Other common contingencies can include issues arising from equipment and fixtures that are being included with the sale. These are areas that could be easy to overlook, but they can serve to throw a major wrench into the workings of a deal. The so-called “little things” can cause a deal to fall apart quickly.
3 Key Steps for Preventing Disruptions from Contingencies
Step One – Create a Comprehensive List
One easy move you can make to prevent disruptions from contingencies is to make a list of all FF&E (furniture, fixtures & equipment) or any other items that will be included with the business for sale. If an item is not included, be sure to remove it entirely.
Likewise, if an item is inoperable then repair it ahead of time. Or at the bare minimum, you could make a list of items that are currently inoperable and include those items in your list. Remember, you don’t want a last-minute surprise or misunderstanding to jeopardize your sale.
Step Two – Check Your Leases
Problems with leases can quickly send deals spiraling out of control. It is a prudent investment of your time to actually read and understand your lease. You’ll want to make certain that there are no issues that could be viewed as problematic. If there are issues, then it is in the best interest of the deal that you disclose this information at the start of any deal. After all, you don’t want to waste anyone’s time, including your own.
Step Three – Predict Questions and Have Answers Ready
The time you invest in predicting potential questions and having the answers to those questions ready is time very well spent. You’ll look prepared and that helps build trust.
Be ready to answer questions that are likely to arise such as are you going to stay on with the business for a given period of time and what will be the cost, if any? What about employees staying on? Are there legal issues that should be considered? These are just a few of many questions. Being able to answer these kinds of questions is a prudent step. You don’t want to do anything to jeopardize the momentum of the deal or the buyer will move on or lose interest.
Considering the needs of your prospective buyer will help you make a sale. When you sell a business, there is no replacement for being organized and prepared. Hiring an experienced Certified Business Broker will also be key for a successful transaction.
Copyright: Business Brokerage Press, Inc.
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