At some point, every business owner will need to think about selling their business. This means you’ll need to be ready to overcome a range of obstacles, as the process of selling a business can be both confusing and time-consuming. Let’s turn our attention to some significant things that can disrupt deals and cause them to fall apart.
Buyers, like sellers, enter the process with a variety of preconceived notions about how the process should work, as well as what they consider to be “a great deal.” The psychological factors involved in selling a business shouldn’t be overlooked. Sellers need to understand the buyer’s specific wishes, as well as their psychology.
Even serious buyers may have highly unrealistic expectations regarding various aspects of a business, ranging from its price to its opportunities for future growth. In some cases, these expectations disrupt deals because a buyer is not ready to purchase a business and sees no urgency in the matter.
Outside parties can also influence buyers, whether these parties are advisors or friends and family. In short, sellers may discover that buyers may actually be several people who are forming a collective opinion on issues regarding the business.
A seller’s own psychology can play a huge role in whether or not their business is successfully sold. Many sellers enter into the process without a full understanding of what is involved. This factor, of course, underscores the tremendous importance of working with a professional months, if not years, before you actually place your business on the market. These professionals should include a merger and acquisition advisor or a business broker.
Another major obstacle is unrealistic expectations many sellers have about both price and the time frame in which their business can be sold. Sellers should enter the selling process with their eyes open and realistic expectations in place. Be sure to establish a fair price, but also understand it may take a year or longer before a buyer is found.
Is your business exit ready?
If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
Acts of Fate
Sellers should remember that there are many “acts of fate” that can disrupt a deal. For example, a deal may seem like everything is moving along without problems, only to discover at the last minute that the buyer isn’t able to secure the needed funds as expected.
It is important for all parties involved to realize that until a deal is finalized, problems can still arise. In fact, they can arise from unexpected directions. But it is difficult to anticipate and spot every potential disruption. The complexity of selling a business is one of the main reasons why so many business owners opt to work with an M&A, or brokerage, professional.