Selling a business can be a costly and time consuming process, so make sure you don’t make some of these mistakes:-
You’ve had enough and so you’ve suddenly decided to sell? The decision to sell a business should not be taken lightly as there could be many things to be done to try and make the chance of selling a business a lot easier. Struggling businesses are difficult to sell and businesses without up to date accounts and paperwork in place are problematical too. Buyers often string loss making businesses into receivership so always best to turn a business around first and then sell.
You are guessing how much your business is worth? The business may be worth as much as someone is prepared to pay for it but this does not place you in a strong negotiating position. Make sure you know how much you business is worth by taking out an independently prepared, professional business valuation. This will help you to understand whether or not it’s worthwhile trying to sell the business in the first place and enable you to substantiate the asking price.
You’re going to obtain a free of charge valuation from a broker? Many brokers have a vested interest in providing you with a free valuation in the hope that you will sign up with them. The value will probably be greatly enhanced so you then feel compelled to pay high up front fees as the business value has probably doubled your expectations and enthusiasm to sell. Once you have paid the up front fees and nothing much as happened you may begin to realise that the business value was not worth the paper the valuation was written on!
You’re going to pay extortionate up-front fees to a Broker? Exactly why are you going to pay thousands or even tens of thousands of pounds for a broker to have the privilege of selling your business? Because they have told you that they do things differently? That the value is in the future potential of your business? Really? No buyer is going to be stupid enough to pay double the true value of your business unless there’s some real strategic reason. Some brokers will feed off the business owner’s greed so watch out!
You’re going to sell your business with a Broker on a “no win, no fee” basis? Sounds a sensible agreement but why? Check out the Terms and Conditions as they may be lots of small print to understand. In particular, when you’ve decided that you’ve had enough and want to take the business off the market or use a different Broker, you might end up with some horrific cancellation fees – some Brokers are geared up for litigation, so watch out!
You’re impressed with the Broker who came to visit you? Nothing quite wrong here but check out who is responsible for selling your business. Some people are there just to “sign you up” and so you’ll never see them again! Which is all a bit of a problem when you want to see someone to discuss the progress (or lack of!) being made with potential buyers. Watch out for slick reports and presentations too – they may impress but could be full of mistakes – if you bother to look closely!