Business Sales Failures: Great Expectations
Sometimes, even with great intentions, things fall through. When selling a small business, many emotions, fears, motivating factors, and events are under the seller’s control, and some are not.
Why do deals fall apart, and what are some of the most common reasons business sales fall through? Human beings are already complicated, and selling a business can be a complicated, challenging affair.
Here are some of the five top reasons business brokers cite for business sales failures on the seller side of the equation:
Unrealistic Valuations. Sellers who overvalue their businesses and set unrealistic sales prices can dissuade potential buyers from pursuing the deal or lead to a breakdown later in the negotiation process. Setting an accurate, “fair,” and proper valuation and asking price is one of the most critical steps when considering successfully evaluating, listing, marketing, and selling a business.
Poor Financial Documentation. Inaccurate, incomplete, or missing financial documentation can hamper a business sale or transaction and raise concerns regarding the business’s true financial health and value. Sellers who fail to file, retain, update, maintain, and secure proper financial and tax documents will face more difficulties convincing potential buyers of their true profitability and sustainability.
Hidden Liabilities. Failing to disclose all existing liabilities, debts, pending lawsuits, or regulatory violations can erode buyer trust in the sale and expose the seller to potential lawsuits. Buyers must conduct their due diligence and vetting, but uncovering issues later in negotiations is a surefire way to derail negotiations and the sale.
Lack of Preparation. A seller must be mentally and fiscally prepared for the potentially lengthy process of selling a small business. Business sellers need to be aware of the potential delays, setbacks, and challenges of selling a business for the best price in the least amount of time. It’s a delicate dance between the seller, buyer, and their representatives, and a lack of preparation–no transition plans, poor communications, failure to respond to the buyer’s concerns in a timely, professional manner, incomplete due diligence, etc. can all lead to difficulties, unneeded stress, or ultimately, they can even kill the deal.
Personal Attachment. Before deciding to sell a business, the seller must understand the experience and ensure they’re committed to it. Some owners have second thoughts about selling their businesses for many reasons, including a change of heart, a strong attachment to the business, unexpected personal or financial reasons, or the inability to view the transaction objectively.
You’ve Got A Friend
For nearly 35 years, I have been helping business owners like you successfully value, list, market, and sell their Florida-based businesses. I am in the top five percent of licensed, trusted Florida business brokers. I know the entire end-to-end process of selling a business faster, with fewer headaches, and for top dollar.
We offer a FREE customized video tutorial and business analysis to help you understand all the factors determining your valuation, listing, negotiations, closing, and more. Call Eric Wayne today at (952) 562-2019.
