All
too often, an entrepreneur convinces himself no one will notice these issues
and, once the sale is finalized, they all will be resolved. But as deals
are negotiated between buyers and sellers, these top five truths surface over
and over again.
If you are a business owner and
thinking of selling … are you ready?
Your business may have been
years or decades in the making. Selling it, on the other hand, can be tricky. Forbes recent took up this topic in an
article “The 5 Things Entrepreneurs Must Know When
Selling A Business.”
So what are these truths?
- You Really Don’t
Matter. Ouch! Buyers simply want to buy a business that is profitable
in-and-of itself. When you, the owner, are not the greatest asset of the
business, then the business is generally considered to be more attractive. - Buyers Know
Which Employees They Will Keep. That is right. Over the years, you may have
hired family and friends as employees. While you value them, the buyer may not.
In fact, the buyer likely has his or her own family and friends to employ. - Even Good Debt
May Catch Up to You. Debt is debt. The red and black ink on your business
ledger can get in the way, especially if it is not structured properly. - Handshakes and
Signatures May Do You In. Your business wheeling and dealing may kill the
deal. In other words, the buyer will have to contend with those agreements,
promises, and sheer liabilities you have incurred building your business. This
is commonly a problem when “agreements” were done on the fly, never reduced to
writing or barely a handshake. A disadvantageous agreement penned in black and
white can be as damaging as a solid agreement can be lucrative. It is the
proverbial two-edged sword. - Your Business
May Be Your Accountant’s Biggest Annuity. Not only may family and friends
get their paycheck under your signature, but so do various professional advisors.
This can create (potential) conflicts of interest. Just be alert. If outside
advisors find their “rice bowls” threatened, then they may drag their feet or
at least be less than helpful.
The original article goes into
much more detail, with even a bit more brow-beating.
Bottom line: the sale of your
business is fraught with many challenges. Proper planning is key to navigating
them successfully.
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Reference: Forbes (September 3, 2013) “The 5 Things Entrepreneurs Must Know When Selling A Business”