Again, a blast from the past as this post, and the one two weeks ago, were first published in 2012. The tips are still valid as not much changes in buy-sell other than the technology.
Recently I wrote about business buyer mistakes and this week it’s about business sellers and what they can do to accelerate a deal.
- Realize that getting the right buyer for your business isn’t easy. What may be easy is to get a semi-qualified buyer to make a high offer. However, then you must worry about the buyer getting financing, getting paid, getting the business back, etc. Make sure the buyer is a good match for the business and you.
- Understand that your business is not that special. There are set price ranges in which companies of various sizes sell. You’re not going to sell for 10X EBITDA just because some $400 million company in your industry did.*
- Due diligence is for proving what you told the buyer before the offer was made; it’s not time for surprises so disclose all red flags about the business early and realize it’s open kimono time, everything is shared. And, speaking of due diligence, don’t forget to do it on the buyer.
- Get an offer sooner vs. later. If the buyer is qualified to run the business, has money, can get financing, and you have a solid relationship then encourage an offer sooner vs. later. Don’t let the process drag on as it will drive you nuts and distract you from running the business.
* I saw (in 2012) an accountant’s worksheet where he used an 11X multiple of profit for a business doing $1 million in sales. Talk about being out of touch. And the worst thing is he gave the seller the impression the business is worth much more than it really is.
“The only way to make your dreams come true is to wake up.” Paul Valery
