6 Common Pitfalls to Avoid When Selling Your Business

Selling a business can be complex and challenging which is not well understood by business owners until they experience the process themselves. If you are considering selling in the near future here are some expert tips that will help you better prepare for this important event.

Get your house in order

One of the main reasons for unsuccessful business sales lies in financial discrepancies. Prospective buyers carefully scrutinize a company’s financial records, and any undisclosed liabilities or inconsistencies can erode trust, becoming a deal-breaker. To build confidence, sellers must prioritize transparent and accurate financial reporting.

What’s my business really worth

Disputes over business valuation commonly hinder deals. Sellers might overestimate the business’s value, while buyers seek a more conservative price. Bridging this gap requires a comprehensive approach involving detailed financial analysis and market research to align expectations on both sides.

Will your business stand up to scrutiny?

Buyers conduct thorough due diligence to assess a business’s risks and opportunities. If sellers fail to provide comprehensive and satisfactory information during this process, it can raise concerns and undermine buyer confidence, ultimately resulting in a failed transaction.

Managing Expectation

Unrealistic expectations, whether from the buyer or the seller, can lead to negotiation breakdowns. Sellers anticipating an all-cash deal or buyers expecting immediate returns may struggle to find common ground. Successful sales hinge on clear communication and realistic expectation management.

Whats in your closet

Legal issues like undisclosed lawsuits or unclear ownership can stop a business sale. Buyers want a clear legal situation, so any uncertainty can be a big problem.

Show me the money

Challenges with financing for the buyer can ruin the deal. Difficulty getting funds or unexpected financial problems during the process could end the deal. Sellers should consider the buyer’s financial situation, knowing it’s crucial for getting acquisition financing.

Achieving a successful business sale requires careful planning, honesty, and good communication. Dealing with these common issues helps both sellers and buyers, making it more likely for the transaction to go smoothly and benefit everyone involved.

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!