The sale of your company will change your life completely.
Whether this change is for better or worse depends on how you go about the selling process.
Of course, we all hope for the best, but if you make any of these 3 mistakes when selling your business, you might not be so lucky.
1. Failing to properly value your business
Pricing your company too low or too high can leave you at a disadvantage when negotiating for the best possible deal. A good rule of thumb is to get a proper valuation from a business intermediary that's been around for at least a few decades--like National Business Search.
When calculating your EBITDA, it’s important that you add back your excess owner’s compensation and benefits, onetime expenses, and excess expenses. This increases EBITDA to a level that more accurately reflects true owner’s compensation. It will also help yield the highest valuation possible.
Without the proper valuation, you risk setting an asking price that’s too low. While this will certainly bring in many interested buyers with good credit ratings who can afford your price tag, it means you’re leaving money on the table.
Conversely, if the price tag is too high and you end up lowering the asking price, it can be really difficult to grab buyers’ interest again. They'll think that there must be something wrong with your business if no one wanted to buy it at the higher starting price.
Instead of simply relying on your gut feeling to price your company, consult with a business intermediary like NBS to learn the best way to approach this significant life event in order to achieve success and avoid mistakes along the way. Our free valuations utilize comparable data from similar companies to provide a realistic estimate of the worth of your company.
2. Getting lost in the sale process
Selling a business is not a quick and easy task by any means. It can be complicated and take months of planning, as well as significant time to make sure all necessary documents are in order before executing on a deal. In addition to that, there are many things you need to consider, including negotiations over price or your decision about who to sell to.
If you don't understand the process, it can be easy to make a mistake and wind up in a deal where neither you or the buyer leave satisfied.
A business intermediary can help with this too. Business brokers are essential when it comes to explaining the selling process and answering any questions you may have. A broker will also offer suggestions for pricing strategies, so you don't have to worry about underselling or overpricing your company.
3. Choosing the wrong buyer
Depending on the seller's goals, a strategic or financial buyer will be brought in. NBS can help you avoid the wrong buyer by making sure your goals are compatible with theirs.
Your best bet against choosing the wrong buyer is to hire a business intermediary like NBS to help guide you through this process and answer any questions you may have. The last thing you want is to choose the wrong buyer and leave the deal without being fully satisfied with your sale.
Working with an intermediary is the best way to minimize your risk and increase the chances of a successful sale with a trustworthy buyer. NBS has been around since 1978, and we’ve successfully executed hundreds of transactions for business owners in a variety of industries. To learn more about how we can help, give us a call at (727) 363-6992 or fill out our contact form to book an appointment.