Top Ten Ways to Avoid Wrecking a Deal When Selling A Business

Finalizing a deal is usually a complex process, and there is a good deal of room for error, misunderstandings, miscalculations, and good old-fashion wild cards.  That is why it is critical to carefully think through the deal process well in advance.  We’re going to explore the top ten steps you can take to avoid wrecking a deal when selling your business.

  1. Confidentiality – At the top of our “how not to wreck a deal list” is confidentiality.  It is vital that everyone involved in the deal takes steps to avoid a breach.  Experienced Business Brokers and M&A Advisors are experts at maintaining confidentiality.
  2. Flexibility  – The second tip on our list is to be Flexible! A lack of flexibility can absolutely destroy a deal. You shouldn’t go into a deal expecting to have all of your terms met and keep in mind every buyer and situation is different.
  3. Be Open to Negotiations – Just as it is critical to be flexible, it is also important to embrace the concept of negotiation.  Sellers are used to being their own bosses, but when it comes to successfully selling a business, no factor is quite as important as a willingness to negotiate on price and on terms.
  4. Advance Preparation – Next on our list of musts to avoid wrecking a deal is to prepare for the sale well in advance. This should not be underestimated.  Sellers will want to make sure that they have several years of records as well as legal and accounting documentation ready and well-prepared.  You can be 100% certain that any serious buyer will want to see your records and take a look at your financials (past and year to date). Do not risk losing momentum, make sure you are prepared upfront to show a buyer your records at a moment’s notice.
  5. A Reasonable Selling Price – An inflated price will decrease the number of buyers that take a serious look at a business.  Additionally, an unreasonable price may make a seller look uninformed and unrealistic.  Business Brokers and M&A Advisors are experts at handling valuations.  One of the single best ways to boost your chances of finalizing a sale is to establish a fair and justifiable price for your business. The asking price must make economic sense. A buyer can learn quickly on the internet how a business is priced and what multiples to expect.
  6. Maintain Operations – Far too often sellers lose track of the day-to-day operations once their business goes on the market.  It is absolutely vital that sellers continue operating their business as though it may never sell.  The bottom line is that it can take months, or even years to sell.  The last thing any seller wants is for their business to lose value when they are in the process of trying to sell.
  7. Keep up the Momentum – A lack of momentum can kill a deal.  Working with a Business Broker or M&A Advisor is an easy way to make sure you maintain momentum throughout the process.
  8. Consider Your Buyer’s Needs – Serious buyers will need a variety of information from sellers in order to obtain financing.  You can expect buyers to need appraisals of assets, information on environmental regulations, and more.  Sellers should have this kind of key information ready and waiting.
  9. Encourage Competition – Another great way to avoid wrecking a deal is to achieve leverage via buyer competition.  In general, it is a good idea to create a competitive situation – one in which prospective buyers know that there is more than one interested party.  Brokerage industry professionals understand the delicacies of presenting this information to avoid upsetting buyers.
  10.  Seller Participation – Finally, sellers must stay involved in the entire process, and that includes being willing to assist during the transition. Showing a willingness to help during the transition period will help to foster goodwill and trust.

There are many reasons why a deal could potentially fall apart.  You may not be able to control every single variable, but by following the ten key tips outlined in this article, you will be well on your way to increasing your chances of successfully completing a deal. Remember selling or buying a business is a complex process so make sure to work with a professional. 

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M&A Business Advisors represents sellers and buyers of privately owned businesses in a wide range of industries in California and Nevada. Our services include Selling a Business, Buying a Business, Mergers & Acquisitions, Business Sales and Acquisitions, Valuations, Opinion of Value, SBA Finance and Business Consulting. Sell your Business, Buy a Business, How do I determine the Value of a Business, How do I Sell my Business Confidentially, What is a Safe Way to Sell my Business, How long does it take to Sell a Business, How do I Sell a Business in California, How do I Sell a Business in Nevada, Search Businesses for sale. We represent Sellers and Buyers in Southern California, Los Angeles County, Orange County, Ventura County, Santa Barbara County, Kern County, San Bernardino County, Riverside County, San Diego County, Los Angeles, Torrance, Gardena, South Bay, San Fernando Valley, San Gabriel, Upland, Woodland Hills, Chatsworth, North Hollywood, Van Nuys, Burbank, Glendale, Pasadena, Santa Clarita, Palmdale, Thousand Oaks, Ventura, Camarillo, Anaheim, Irvine, Santa Ana, Huntington Beach, Newport Beach, Fullerton, Laguna Beach, Aliso Viejo, Rancho Santa Margarita, Orange, Costa Mesa, Brea, Loa Alamitos, Mission Viejo, Fountain valley, San Clemente, Northern California, San Jose, San Francisco, Oakland, San Ramon, Napa, Sacramento, Nevada, Northern Nevada, Southern Nevada, Reno, Carson City, Tahoe, Las Vegas.