In a “perfect world,” business owners would plan three to five years ahead to sell their companies. But, as one industry expert has suggested, business owners very seldom plan to sell; rather, selling is “event driven.”  Partner disputes, divorce, burn-out, health crises, and new competition are examples of events that can force the sale of a business.

Partly because of this failure to adequately prepare in advance, sellers often find – after they have decided to sell – that the unexpected happens and they are “blindsided,” or caught off-guard. Below are a few of the unexpected issues sellers should know about.

Substantial Time Commitment

Sellers find that the time necessary to comply with the requests of the merger and acquisition advisor, and potential buyers, can take valuable time away from the actual running of the business. It takes time to collect the documents and information necessary to compile the offering memorandum. Many sellers are unaware of the amount of their time necessary to gather all this information, nor of its importance to the selling process.

There is also the time necessary to meet and visit with prospective buyers. An M&A advisor will play an important role in screening prospects and separating the “prospects from the suspects” – thus, saving the seller valuable time.

Everyone Must Be Considered

Many mid-sized, privately-held companies also have minority stockholders or family members who have an interest in the business. The managing owner may be the majority stockholder, but in today’s business world, minority stockholders have strong rights. The owner must deal with these people – first in getting an agreement to sell, then convincing them about the price and terms. A “fairness opinion” can help resolve some of the pricing issues. Minority stockholders and family interests must be dealt with and not overlooked or pushed to the end of the deal. Failure to properly deal with these interests may, literally, lead to the “end” of a deal.

Price Isn’t Everything

All sellers have a price in mind when it comes time to sell their companies. Most businesses go to market with an aggressive price structure. When an offer is presented, it is generally (sometimes significantly) lower than the seller anticipated. A seller is never prepared for this event. He or she is blindsided, and not very happy – often resulting in a rejection of the deal without even looking past the price. An M&A advisor provides a valuable role in structuring the deal, so it can work for both sides.

Expect to Compromise

Business owners are used to calling the shots. When an offer is presented, in some cases they still believe they have complete control. Owners (who wish to become sellers) must understand that selling their company requires “give and take.” They can stand firm on the issues most important to them, but they must give on others. There are also some owners who want their attorneys to make all the decisions, both legal and business. But nobody knows a business like its owner, and the owner is the person who ultimately has to live with the choices made, so it is wise for the business owner to make the business decisions.

Confidentiality Risks

There is always the small possibility the word will leak out that one’s business is for sale. It may just be a rumor that gets started or it may be worse – the confidentiality agreement is broken. Sellers must have a contingency plan in case this happens. A simple explanation that growth capital is being considered or expansion is being explored may quell the rumor.

Diligence Required

Despite the enormous amount of work that is involved in marketing a business for sale, the owner must still run the business – and run it well. Buyers will be kept up-to-date on the company’s progress, even though it is for sale, so owners would do well to remain diligent about business matters in order to keep their business appealing to potential buyers.