3 Common Lessons to Remember to Avoid Pitfalls in Business Sales

It’s a universally accepted idea: nothing can truly take the place of firsthand experience, especially when it comes to critical decisions like selling a business. Missteps, often rooted in inexperience, can be the difference between a lucrative sale and a missed opportunity.

Imagine this – a seasoned entrepreneur on the brink of retirement. His business, with several branches, boasts of millions in yearly revenue. He meets with a renowned Business Broker and is captivated. Yet, swayed by the recent MBA accolade of a family member, he decides she should lead the sale to save on costs. A seemingly sound decision, but the repercussions of this choice unfold in unexpected ways.

Here’s a breakdown of some crucial oversights, ones you can sidestep if you’re ever in this position:

1. Overlooking the Importance of Discretion

The entrepreneur and his well-intentioned niece didn’t consider the importance of confidentiality in business deals. By not using non-disclosure agreements with potential buyers, word spread like wildfire. The ripple effect? Suppliers, competitors, staff, and clients all discovered the sale. This oversight could potentially jeopardise the business’s standing and value, making the sale more challenging.

2. Inaccurate Financial Representations

In her role, the niece took on the responsibility of crafting a financial overview and a detailed memorandum for the sale. However, in her haste or oversight, unaudited and unverified financial statements were used. Worse still, a significant sum of money that the business owner drew went unreported simply because he failed to relay that to her. This lapse could undervalue the business, lead to reduced offers, and even deter potential buyers.

3. Excluding Key Players

Opting not to involve the CFO was the third misjudgment. While the niece believed she was equipped to handle the financial intricacies, prospective buyers had other expectations. They anticipated discussions with the CFO and anticipated his involvement during their due diligence. By sidelining the CFO, the business owner unintentionally complicated the selling process.

The bottom line? Navigating a business sale isn’t a task for novices. If you’re considering selling, it’s imperative to seek out a seasoned Business Broker or a professional well-versed in the nuances of business transactions. Remember, when it comes to significant life decisions, experience isn’t just valuable—it’s indispensable!

Ready to Navigate the Business Selling Process Smoothly?

Don’t leave such a significant decision to chance or inexperience. Trust professionals who have a proven track record in handling business sales with finesse and expertise. Contact our experienced Business Brokers today and ensure your business gets the valuation and attention it deserves. [Get Started Now].

Interested in Buying or Selling a Business?

For expert guidance and assistance, reach out to our Managing Partner, Greg Johnson. With credentials as a Certified Practicing Accountant, Certified Exit Planner, and Business Broker, he’s equipped to help you navigate the process seamlessly.

Contact Greg Johnson today!

Contact Ascend Business Partners today on 03 8794 7777 or ascend@ascendpartners.com.au to have a discussion about your business and financial goals. Or simply book a free 1-hour “Time to REFIRE” workshop with Greg!