I have seen the following scenario a thousand times. You have worked hard on scaling your business. You have made all the right decisions and have grown your business to the point of being able to sell it for a significant profit. And once the time comes to pull the trigger and put it on the market, the wheels start to fall off. Your best laid plans suddenly aren't enough and the selling process turns into a roller coaster ride. Maybe you have had a buyer or two bail out in the 11th hour. Maybe you have significant issues during the due diligence process which caused you a sale. Or perhaps, worst yet, an employee found out and told the rest of your team. Selling a business is a tricky procedure, and for many business owners they struggle to cross the finish line. 

So, today I wanted to share with you some tips that I wish all business owners knew prior to putting their business up for sale.  

1.The Sale Begins Long Before It Goes on the Market.

As a business coach for over 25 years, I have helped a lot of businesses reach the next level. And I like to begin discussing an exit strategy long before it becomes an issue. Things like company culture, systems and controls and growth strategy all play an integral part in the sale of your business down the road. So the best thing you can do to help facilitate the sale of your business, is to start early with a clear plan on what your exit strategy will look like. Many of my clients start exit planning years before they ever put their business on the market. 

2. Stop Focusing Too Much On The Sale And Not On Running Your Business.

You need to make sure you run your business well THROUGH it's final closing. Many business sales fail in the 11th hour and if you are focused on the sale and not growing your business during the due diligence time period, you will find yourself with a business that has trended down and will yield a lower sales price when buyer number two or three comes along. 

This is why working with the right business broker or investment banker to help "run" the sales process for you is so valuable--it allows you to run your business well through the closing. 

3. Be Realistic About The Timeline.

"I will be sipping Mai Tais on the beach in 90 days." 

Selling your business takes time, don't kid yourself. It may take 12... 24... even 36 months. Many buyers fall away. Due diligence is a pain. And you may have to repeat the entire process two or even three times before closing a deal. Realize that this isn't going to be a 90 day sprint.

4. Some Buyers Have No Intention of Ever Buying Your Business.

Sadly, some buyers have no intention on ever buying your business--they are simply looking for insider information on your customers, pricing strategy, key employees, etc.

Make sure you also have a solid non-disclosure with strong non-solicitation provisions. You will also want to ask the following before disclosing any information. 

  • Why are they looking to buy yours or any business?

  • Do they seem viable as a buyer?

  • How will they pay?

  • What are their business references who can speak to their integrity?

  • If the buyer is a publicly traded company, have you researched their SEC filings?

  • Have you spoken with other companies they've acquired? If not, why not?

If you have a business broker, many of these questions will be handled by the broker before you ever see a letter of intent. 

Selling your business is a marathon and can take its toll on your mental health. The more prepared you are before going to market, the better off you will be when things get stressful. 

Published on: Mar 3, 2020
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.