Synopses of Numbers 56 - 66 of 66 Obstacles to a Successful Business Sale
In the last issue (#28), we provided brief Synopses of Numbers 45 – 55 of 66 Obstacles to a Successful Business Sale. This issue will supply short Synopses of Numbers 56 – 66 of 66 Obstacles to a Successful Business Sale.
"We are built to conquer environment, solve problems, achieve goals, and we find no real satisfaction or happiness in life without obstacles to conquer and goals to achieve. " Maxwell Maltz
Synopses of Numbers 56 - 66 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 56 – 66:
56) Environmental Risks
To help eliminate buyers’ perceptions of risk, where there are possibilities of environmental contamination, sometimes it’s best for the seller to “buck up” (a few thousand dollars) for a Phase 1 Environmental Site Assessment before selling the business. Doing so can be the difference between retaining and losing an otherwise qualified buyer.
57) Employee/Labor Problems
Do your best to try to resolve any employee or labor problems before selling the business. If any unresolved issues remain, disclose them upfront so there are no surprises in the due diligence phase.
58) Pension Plans and other Post-Employment Issues
There can be complex legal issues associated with terminating or transferring employee benefit plans. Get your attorney involved early and be prepared to intelligently discuss resolution options. Disclose the existence of employee benefit plans very early in the sale process.
59) Changes in Competitive Threats or Business Environment
For example, Blockbuster caused the closing of many family-owned video stores. Then Redbox and Netflix were the primary reasons for Blockbuster’s bankruptcy. Staples, Officemax and Office Depot resulted in the demise of many locally-owned office supply stores. Always be aware of developments in your industry.
60) Lack of Chemistry Between Buyer and Seller
Good chemistry with the buyer can be a significant factor in achieving success during negotiations. On the other hand, poor chemistry can be a significant obstacle to successful negotiations.
61) Lack of Barriers to Entry
If the barriers to entry are very low, and the advantages of buying an established firm are not overwhelming, buyers may opt to start a business on their own. It’s a good idea to be prepared for the buyer question, “What are the barriers to entry for this type of business?”
62) Problematic Vendor Relationships
In addition to acquiring your customers, buyers are also acquiring your vendor relationships. Too much concentration/reliance with one vendor can be as bad as customer concentration issues. Prior to putting your business on the market, try to resolve as many vendor problems as possible.
63) Accounts Receivable Collections Issues
Untimely collections of accounts receivable requires a higher investment in working capital, creating another financing obstacle for buyers. Unreliable collection of accounts receivable and bad debts create a high risk factor in buyers’ minds. A commitment to improving timely accounts receivable collections makes good sense at all times, not just when considering a sale of your business.
