The biggest frustrations for me as a ‘business ready for sale’ coach and as a business broker are the beliefs business owners develop around selling their business.
Very often these beliefs are etched in to their minds by well meaning accountants, bookkeepers, business coaches, friends and the media.
If you want the real facts about having a business that’s ready for sale ….
Attend my half day workshop on preparing a business ready for sale!
What are those common beliefs and mistakes owners make?
(1) I’ve had my business for 30 years and my accountant says it must be worth a $million
WRONG! Whilst longevity is a factor it doesn’t affect the market value very much. It may help to make it more attractive to a buyer and therefore easier to sell. On the other hand it can also be a negative if the business hasn’t kept up to date!
(2) My accountant says my business is worth 5 times earnings before interest, tax, depreciation and amortization (EBITDA)!
WRONG! With the best will in the world, very few accountants are able to put a market value on a business. Why not? because they are not out there in the market place day after day selling businesses. Also, there is no set multiplier (properly called an ROI factor) or ‘rule of thumb’ for different types of business. Yes, the adjusted net profit (sort of EBITDA) is one part of it, but the the risk to that profit determines the ROI factor (multiplier). This is explained in detail in my half day workshop with lots of real examples.
(3) It’s a waste of money engaging a broker or lawyer and using a sale agreement. I’ll just write something up with the buyer.
WRONG! You most definitely need a good business broker or lawyer involved to protect both parties and avoid litigation after the sale. Dollars invested now can save you a fortune and a lot of problems post sale.
(4) My business is a simple one. As long as the buyer offers me the asking price that’s all I need to agree.
WRONG! There are numerous things that need to be discussed and agreed at the offer stage. Then everything needs to be in the buy / sell agreement before both parties sign. Failure to do this thoroughly can end up in litigation after the sale.
(5) That’s it, we’ve signed the sale agreement so I can slow down now and book my flights to Bali!
WRONG! The seller has an obligation to the buyer to keep running the business as they always have until settlement. Many sales fall through because of things which come out in due diligence! Sometimes the buyer will not get finance. It’s not over until the money is in the bank! If you let the business slow down and then end up keeping it …….
This is just a very small list of the things that need to be dealt with when selling a business.
How can you avoid making these mistakes and sell your business in the shortest time, for the least hassle and for the most dollars?
Start by attending my next half day workshop on preparing a business ready for sale!
I am a business ready for sale coach and business broker and dedicated to helping business owners prepare their businesses “ready for sale” – whether you want to sell or not, because a business that’s ready for sale is well worth keeping!
I tried to sell a business privately and failed because I made all the mistakes! Then I learned the correct way from one of the best brokers in Australia. I then practiced as a broker with the firm that sold my business for 5 years. All of that learning and experience is the value add that I can bring to you!