As a Business Seller, it is important to understand why most deals fall apart. From our experience, time is the most likely reason that business transactions fail. As a potential sale drags on, the business seller is left in an uncomfortable state. The business buyer may also become frustrated as fees accumulate from due diligence. The deal can reach the point when one party decides it is time to move on. Studies indicate that the average business sells in 6 to 18 months from start to close. Once a letter of intent has been signed, the due diligence and closing process usually takes 30 to 90 days.
How can you as a business seller keep the sales process moving forward?
From your business broker to your attorney and accountant, you want to consider hiring specialists in business transitions. Inexperienced advisors tend to be overly conservative to protect their liability. That can drag out the negotiation process and may cause frustration for the parties involved. If you are serious about selling your business, you really don't have the time or money to pay to educate your advisors on the mergers & acquisitions process. For the best possible results, you want to work with someone who knows the proper sequence of events so there aren't any unnecessary delays. Missing just one detail can cause a delay in closing the deal.
Your advisor should spend the time packaging the business up front. A detailed confidential business profile can be developed that answers ninety percent of the standard questions from a potential business buyer. It will also save you time because your business broker won't be requesting pieces of information as new buyer questions arise. It will also help buyers make decisions more quickly.
A business seller must be prepared to move forward emotionally and financially. A properly prepared seller will have considered their future plans and make sure their financial expectations are in-line. A professional advisor should be honest in what he or she believes the market can bear and should not let you go to market with an unreasonable asking price. A third-party business valuation is recommended.
Your business broker should screen all buyers to ensure they are serious about the potential acquisition and have the financial means to move forward with a transaction. You don't want to waste time with buyers who simply can't afford to purchase your business.
Selling a business can certainly be an emotional ride. Business transactions don't need to be chaotic events. The best investment you can make is to work with deal makers and specialists who will help to minimize the stress and help everyone move forward toward the timely completion of the business sale.