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?

Sorry to say it, but there isn’t 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.

Prepare Yourself For the Sale

Business owners will naturally begin to start transitioning out of their business as soon as the thought of selling begins. 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. They do this by offering easy way outs that may detrimentally affect the company and subsequently increases the risk that damages the business owners exit value. This naturally flows onto the next point.

Engage the Right Advisor

Not every business owner will understand the vast complexities of selling a business. 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. An ability to establish and identify points of growth and value within the business is imperative. The cost of employing the right advisor is far outweighed by the value that they will maximize out of your business sale.

Secure Customer Contracts

In reality, months prior to most sales, key customers from businesses generally lose trust. The majority attempt to break away, discouraged and unfaithful of the new owner value. 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. It is imperative that buyers will need to create 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?

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