The Challenges in Selling Your Business
There are many challenges in selling a business This list indicates some of the challenges facing you when considering an exit strategy or sale of your business.
| Managing Risks
||There are several risks while selling your business. The most important includes concealing the fact that your business is for sale. If it is widely known that your business is for sale, your employees, suppliers, bankers and customers will become unsettled.
Another risk is that you lose focus on running the business while performing the many activities needed to market and sell it. The risk that your business will degrade during the sales process is high.
|Maintaining Maximum Confidentiality
||As mentioned above, the need for confidentiality is very important, particularly with competitors. If a competitor finds out that your business is for sale, he may try and capture your customers, suppliers and employees. He can literally "acquire your business" without buying it.
|Selecting a Team of Professionals
||Selling a business is not like anything you have sold before. Imagine having to sell an important asset without being able to advertise it is for sale or tell anybody about it. Many of us have sold houses or property and may feel we have the skills to sell a business. This is risky without understanding the need for a team effort with professionals who have done it before and can guide you through the process. IAG and its strategic partners have a variety of programs to help you through the process.
|Determining the Right Price.
||You may have a value in mind for the business but a buyer may have an altogether different idea. It is important to utilize an independent third party to place a realistic value so that you can optimize the sales price while reducing the time on the market. A key element in striking a deal with a buyer is the Terms of the Deal.
|Packaging the Business
||The process of getting your business ready for sale, similar to upgrading your house prior to sale, will yield a higher sale price for your business. This may mean physical as well as financial upgrades to place the business in the best light. IAG's Analysts can help you understand what is important and how to show it to buyers.
Also part of the packaging are the marketing materials, brochures and other documents that support the asking price and provide in depth discussions of the business, its philosophy and other factors contributing to the goodwill and thus the sales price.
|Marketing the Business.
|| Once the business is "packaged" and ready for sale, a comprehensive marketing plan should be established to gain the widest viewing as quickly as possible. The types of buyers should be assessed to determine how best to attract/approach them. Depending upon the type of business or location, a strategic buyer may be interested and must be "found" through your marketing efforts. A strategic buyer will usually offer a higher price because the business is complementary or has a physical location that augments the buyer's business.
|Running the Business while for Sale.
|| As mentioned above, many a business has languished or even failed while the business owner has been engaged in the sales process. The sales process is very time consuming.
|Entertaining and Screening Potential Buyers.
||This topic has to do with running the business while trying to sell it. Screening buyers and entertaining them while they look you and your business over will take a lot of your time. In addition, you may not be as objective and you should be during these initial meetings. This could expose weaknesses in the business resulting in a lower sales price or rejection by the buyer. It is better to have an intermediary screen and interview potential suitors so that the business can be positioned properly when you meet them or they visit your site.
||This is the most nerve wracking phase of the sales process because the buyer will be looking at all aspects of your business, its financials, market, and product. Most buyers are looking for excuses or reasons NOT to buy the business. Any little factor may cause the buyer to lose interest. Having the business and its books and records in shape may eliminate surprises for the buyer and make for a smoother Due Diligence process.
|Closing the Deal
||This is the end zone but the game is not over until everyone agrees on the final terms of the deal and funds pass to the seller. Some buyers may use unethical gambits to threaten to back out to gain more concessions from the seller. It is important to be represented by legal counsel, Transaction Specialists or Brokers to mediate any last minute deal breakers and ensure a smooth closing.