Exiting a business – 7 common mistakes

Exiting a business – 7 common mistakes

exit strategy I was recently at a business seminar in London and the question was asked “Who is planning on selling their business in the next 2 years?”. Over 50% of the room raised their hands.

I’ve been in the M&A and Sale game for a lot of years and what I know from that (straw) poll in my experience is that a high proportion of the potential sellers are not ready to sell the business on their terms and maximise their value. They have no idea about the potentially stressful process they are about to embark on.

Timing a sale is important, but NOT as important as preparation. When the business is sold, it is (or should be) a rigorous process of checking by the purchaser – and thats what should be assumed. Lets face it, the purchaser is being asked to part with money for an asset built with the business owners own blood, sweat and tears (but just know that the purchasres don’t care how much effort its taken to build the business).

The most common mistakes I’ve seen:

1. That the purchaser will love the business as much as the owner – they don’t, no matter what the they say;
2. The owner is not prepared for a business sale process – entrepreneurs rarely know the road ahead in this area and therefore are not familiar with the process (it can be stressful and demanding);
3. The team is not right for the sale (accountant, solicitor, “broker”, valuers, financiers) – its a specialised area and the right team that understands business sales is NEEDED;
4. Releasing too much information too early – give what is asked for and make sure its accurate and supports your story;
5. They do not manage the sale process, and let third parties direct the ship – fatal unless the ‘guides’ have experience in this area!!!
6. They do not build the TRUE value into the business as they execute a strategy
&. And here’s the BIGGEST one, they become emotionally attached the to outcome and their business

I’ll be exploring exiting businesses even more in the coming months.

phil@philolsen.com

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