The 10 most common mistakes when selling a company

You have made it to this point. You are planning to sell your company but you don’t know how to go about it. The buying and selling of companies is a complicated process where you can easily trip over obstacles that could result in the failure of the operation.

In order to avoid this, within this article we will explain to you the ten mistakes that you should never make if you want the sale of your business to be a success:

1. Not having a rigid valuation of your company

You can´t begin to sell your company without really knowing what it is worth. Given that, you will not be able to negotiate your price rationally with your potential buyers. You could be asking for a price which outweighs your capabilities or ignoring the fact that the real value of your business is much greater than what you are asking for.

2. Changing your interests or motivations for selling the business during the sale.

A good seller has to reflect beforehand about why he wants to sell his company and what he wants to do after it’s been sold. It could be damaging if you don’t have that clear in your mind when it becomes time to sell given that the buy can notice strange changes in your attitude and raise concerns. They could also interpret your insecurity as a lack of honesty; and because of this your buyer could start to have doubts about you and subsequently your business. This raises his perception of risk and will inevitably lower the value he places on your company.

3. Negotiating with only one buyer

When you begin a negotiation with only one buyer and the buyer finds out, he will start to waste time and will leave every meeting asking for more concessions.

4. Not beginning the process with confidentiality

A lack of confidentiality can make the buyer abandon the purchasing operation and can also generate uncertainty in the market about the future of your company. In this way, it can fuel rumours and the market may begin think that your business has spent so much time up for sale because there are problems with it, which consequently would lead to an unwanted devaluation of your company.

5. Undertaking the process alone, not contracting advisors

The sale of your company is a laborious and time-consuming process. Throughout the process you ought to have in mind that the outcome of your company should be what is best for the business, monitoring the advisors at the same time and ensuring that they keep you informed every step of the way.

Without good advisors it is very difficult to maintain confidentiality and ensure a rigorous search process for the ideal buyer.

Even the best negotiators can fail when it comes to the sale of their own business because it is not just any negotiation, you must bear in mind that there will be personal sentiments which are likely to largely influence your ability to negotiate as you no longer have objectivity.

6. Neglecting the business during its sale

As has already been mentioned, the sale of a company is a long process which requires a lot of focus and effort, therefore the fact that an entrepreneur would take on this task alone is baffling.

7. Orienting the operation only in the local environment.

This possibility is lead to a reduction in confidentiality, and it is also unclear that the potential buyers in this area would be the best for the company.

8. Not assuming, where appropriate, that there are other minority shareholders (probably with particularly different motives or interests).

It is fundamental that all the shareholders are in agreement over the sale of the company; otherwise the operation could endanger, and leave in vain, the efforts of the business as well the money invested. You must make them participants in all that affects the company.

9. Wanting to rush the sale.

Rushing can end up in you losing the possibility of negotiating and finding the best buyer. Your buyer can tell if you are rushing, which may incite uncertainty and will give him ammunition to demand more concessions.

10. Not planning the process.

The selling process always needs to be planned; otherwise you could lose value at every stage. Disorder only brings risks and surprises which results in the devaluation of the company, the elongation of the process, the complexity in selling your business, and, as a result, the possibility of failure will rise.

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