Preparation, not pitfalls
In a recent presentation at an Exit this Way seminar, I talked to business owners about the potential pitfalls that may occur when owners are not ready both operationally and emotionally to sell their business. Deals often don’t get done -- an astounding 75% of business never sell -- because business owners are not prepared.
Be red-flag free
There are lots of reasons why a business owner may back away from selling or have a deal fall through from the buyer side. The seller may have unrealistic expectations about what their business is worth or they may not have considered the impact leaving their business will have on their emotional psyche. On the operational side, the seller may not have not looked at their business from a buyer’s perspective and uncovered any ‘red flags’. These red flags may take the form of a decline in business, poor business management and operational structure or deficient customer contracts.
Here are eight tips to a successful business transition:
1. Get a team of advisors you can trust
2. Be the decision maker
3. Understand the buyer’s process; due diligence should be on both sides of the buyer/seller equation. For the seller, do pre-due diligence, way before you are ready to sell.
4. Take on the buyer’s perspective (would you buy your company for what you are asking?)
5. Settle on a realistic price and stick with it
6. Understand the transaction process: let your trusted team do their work
7. Make decisions in a timely manner
8. Have a plan for what comes next in your life
Our experience with business owners who have completed a transaction in order to retire has taught us that being prepared operationally and emotionally can pave the way for a smoother transition. Check out how we work with business owners and use our Value Enhancement Framework to get business owners on a path to a successful transition.