Synopses of Numbers 45 - 55 of 66 Obstacles to a Successful Business Sale
In the last issue (#27), we supplied short Synopses of Numbers 34 – 44 of 66 Obstacles to a Successful Business Sale. This issue will provide brief Synopses of Numbers 45 – 55 of 66 Obstacles to a Successful Business Sale.
"Press on. Obstacles are seldom the same size tomorrow as they are today. " Robert H. Schuller
Synopses of Numbers 45 - 55 of 66 Obstacles to a Successful Business Sale
To view the complete list of 66 obstacles, click on this article: Issue #23 – 66 Obstacles to a Successful Business Sale.
Following are brief summaries of obstacles 45 – 55:
45) Not Believing Time is of the Essence
Always assume buyers have other options they are considering. When qualified buyers express interest in your business, help move them through their evaluation process as quickly as possible. Cooperation with buyers needs to be a priority. If you drag your feet, they will too. Despite the need for patience mentioned in obstacle #43 in the previous issue, establishing reasonable deadlines is appropriate.
46) Failure to Facilitate Closing on a Timely Basis
The passage of time always works against the successful closing of a business sale transaction. If you or your advisors dither in responding to a buyer’s due diligence request, it creates a harmful impression in the buyer’s mind: “Why is the seller taking so long to respond? What’s going on? Are they manipulating information? Have I uncovered something they do not want to discuss or disclose?” If you are unable to respond quickly, it is extremely important to immediately communicate why and when the buyer can expect a response.
47) Sellers Surprised by Tax Implications
The tax bite in a business sale can be very significant. It’s important to understand tax implications prior to putting your business on the market. Don’t wait until you have an offer to evaluate.
48) Failures in Negotiating Representation and Warranties
Buyers feel they should be entitled to standard protections that other buyers receive in their acquisition agreements. If you were buying, your attorney would attempt to include the same language for your protection. In evaluating the severity of the representations and warranties, ask your attorney which of those protections he would compromise on if he were representing you as the buyer rather than as a seller.
49) Failures in Negotiating Non-compete Agreements
Buyers have a legitimate right to expect sellers to sign reasonable non-compete agreements. If you waver on this issue, the buyer will fear he will be unsuccessfully competing against you in a short period of time.
50) Failures in Negotiating Terms of Seller Financing
In today’s market, it is very likely you will have to provide some seller financing. When you have a qualified buyer with whom you feel comfortable, it’s best to keep an open mind on the amount and terms of partial financing you might provide. Often the tradeoffs gained in negotiating acceptable seller financing can be beneficial to your longer-term net proceeds/rewards.
51) Nitpicking in Negotiations
In negotiations, always stay focused on the big items that really matter. Successful negotiations result in win-win scenarios. Be prepared to give on some items to win the results you absolutely require. Nitpicking is counter-productive.
52) Technological Obsolescence
Changing technology can affect salability. Example 1: Typewriter repair business! Example 2: Many printing businesses have failed to adjust to the digital age and are struggling to compete and survive.
53) Lack of Compliance with Regulations (Environmental, Health/Safety, Taxes, etc.)
Although acquiring a business is inherently risky, buyers are primarily motivated to minimize risk. When there are regulatory issues, it’s best to try to resolve them before selling. If that is not possible, disclose the issues up front and provide the buyer with a path to resolution.
54) Lack of Compliance with Regulatory Authorities (Franchisors, Licensors, etc.)
By agreement, stakeholders such as franchisors, licensors and manufacturers who offer exclusive distribution rights have the power to approve or disapprove the transfer of your business. If you are not in compliance with their agreement, they will kill your deal. Address this issue before selling your business.
55) Unresolved Legal Issues
Before attempting to sell your business, it is important to work with your attorney to resolve any outstanding legal issues.
"Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish." John Quincy Adams
Overcome the Power of Inertia
Overcome the Power of Inertia and call a business broker for a free consultation. Many brokers offer no-charge, no-obligation evaluations of small businesses. They can provide a broker opinion of value and help you identify obstacles to a successful sale as well as opportunities for improvement to increase the value of your business. That is a great way to start planning for a successful and profitable exit from your business.
