Stephanie turned to me and said what a roller coaster it had been trying to sell her company. She had two buyers bail at the 11th hour and felt like she was in mile 24 of a marathon.
Eventually Stephanie's third buyer proved to be the right one, and they closed with a substantial 8-figure wire transfer into Stephanie's account, but the wear and tear of the selling process was quite high.
Afterwards, she and I spent some time talking about what wished she would have known before she sold.
This prompted me to share with you the collected insights of Stephanie and many of our other clients. While most of our business coaching clients think that selling their company is years off (if ever), what they come to realize is that the time to get informed about selling your company is years before you put it on the market.
Here are the top 5 pitfalls of selling your company that I hope will give you valuable insights to do it better and smarter.
Pitfall #1: Stopping before the finish line.
Repeat after me, "My main business, is my business."
You need to make sure you run your business well THROUGH it's final closing. Many sales fail and you'd hate to have a sale fall through only to see that your business has trended down, and now your next buyer wants to pay you less.
You have to race THROUGH the finish line. 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.
Pitfall #2: Deal fatigue.
Repeat after me, "This is a marathon, not a sprint."
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. Set your mind that this isn't going to be a 90 day sprint.
Pitfall #3: Buyers who are looking for information, not a business.
Repeat after me, "I will qualify my buyer and do my due diligence on them before I share any private or critical information."
Sadly, some buyers aren't--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.
- 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?
Pitfall #4: Your team feeling the rumors.
Repeat after me, "I will be very careful to not let my team find out about a potential sale until I'm ready to talk with them."
This means talking with your CFO early and getting him or her to be very careful. Then later, it means bringing your leadership team into the mix, again with clear guidelines to them to be careful about holding this information in confidence.
The bottom line is that you must protect your company from the destructive power of the rumor mill.
Pitfall #5: Customers finding out too early.
Repeat after me, "I will only share customer information late in the sale process."
And then only with clear non-solicitation provisions your attorney has written up signed by your buyer.
And for those of you who want to scale your company larger before you sell, I'm doing a special webinar training on the 5 steps to scale your company without sacrificing your health, family, or life to do it. Click here for more information and to register for free.