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Selling a business is a complicated, lengthy process that is riddled with numerous factors that can make or break the process. This is why so many businesses fail to sell, in fact, 70% of all mergers and acquisitions fail in Australia. Nonetheless, key trends identify that regulators are beginning to establish more regulatory scrutiny towards the M&A environment, and more complex, creative, and difficult acquisitions are managing to succeed even within the COVID-19 environment.

How do you avoid the pitfalls that are common with selling a business?

As selling a business is so complicated, there simply is not a “magical answer” that will automatically prevent any difficulties within the business selling process. The real solutions are far more ambiguous and translate differently to every business. However, there are key guidelines that are vital to follow to ensure the business selling process is streamlined and averse to risks.

Be Mentally Prepared for the Sale

Business owners will naturally begin to start transitioning out of their business as soon as the very thought of selling their business begins to take up more headspace. This is extremely important to become conscious of, if you begin to lose track of your goals and expectations, opportunistic buyers will attempt to take advantage of this, offering easy way outs that may detrimentally affect the company and subsequently increases risk that damages the business owners exit value. This naturally flows onto the next point.

Engage the Right Advisor

It is not expected for every business owner, if not any, to fully understand the vast complexities within selling a business, and especially how to leverage that for personal gain. Logically, advisors and experts can utilize their knowledge and experience in selling businesses, the problem is which one is right for the business owner. Key characteristics to finding the right advisor include; a compatible skillset with the right financial and business processes, a complex and rigorous method that doesn’t allow shortcuts, and an ability to establish and identify points of growth and value within the business. If the right advisor is chosen, the cost of employing them is far outweighed by the value that they will maximize out of the business sale.

Secure Customer Contracts

In a perfect world, the new business owner is transitioned over instantly and engages proactively and effectively with all the key customers in the business and even imports over new and exciting prospects. In reality, months prior to most sales, key customers from businesses lose trust, and the majority attempt to break away, discouraged, and unfaithful that the new owner will provide the same value that was there prior. Conjointly, business buyers want to see customer contracts with key customers. While the seller may trust that a customer will continue as normal after the business sale, buyers will need a stronger guarantee to avoid business failure following the sale. Therefore, it is crucial for the owner and management team to be proactive early before sale negotiations and meet with key customers/clients, and lock in long-term contracts and agreements, creating added value for the business and solidifying streams of revenue.

Want to maximize the value out of your business sale?

BUSINESSNAV CAPITAL offers professional financial services for businesses Australia wide. BUSINESSNAV CAPITAL advises businesses on the requirements needed to secure the necessary capital and maximise the business’s exit price, fulfilling their business objectives through the development of a transaction strategy. BUSINESSNAV CAPITAL is run by experts who have helped many owners avoid business failure and maximized the value for the sale of their business. Find out how we can help you.

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