Ten Reasons Sale Transactions Fail
Comicus : “Dopus; I almost had the money in my hand” – dialogue from the movie History of the World Part I
As followers of this blog know, I am a devout fan of Mel Brooks. I have found his
spontaneous comments on bits such as the 2000 Year Old Man both intriguing
and perceptive. And, many contain life lessons; garlic as the ultimate weapon against
the angel of death; fear to motivate singing; dancing to avoid someone kicking you.
While I have not experienced as much as he has, I have seen more than
my share of failed sale transactions so I decided to assemble my list of the top
ten reasons sale transactions fail.
In reverse order they are:
- Waiting until next year. You believe you will always do better, show improved resultsand be worth more. As I write this blog, I do not think there has been a better time in mybusiness career to sell a business. And if you wait until you have captured it all andthere is no more growth left, your value fades.
- Forgetting it’s a process. You have to give it a chance to work. Every transaction hasemotional highs and lows and entrepreneurs are loathe to wait it out. You needpatience and trust in the process.
- Eliminating a logical buyer. With all the consolidation in our profession, my mantra is“today competitors; tomorrow colleagues.” Don’t overlook those who know your industrybest.
- Too much focus on the past. Buyers are only interested in the past as an indicator ofthe future. If all you had was historical operations and it was all in cash on your balancesheet, all anyone would pay you is the value of that cash dollar for dollar.
- Poor deal structure. Please let the professionals handle this. It is what you get at theend that counts; not just the price.
- Doing the deal yourself. You probably wouldn’t sell your own house; why do youthink you can sell your business? Get a qualified, knowledgeable agent.
- Ignoring your warts. Perform due diligence on yourself and make sure youunderstand what is good and not so good about your business. Then develop a plan toaddress the concerns.
- The wrong deal team. This is the transaction of a lifetime. Surround yourself with thebest.
- Sellers’ remorse. I have blogged about this before. You won’t sell if you do not havesomething to go to. Make sure you do or do not start the process
1. Unrealistic price expectations. I know; you have the most beautiful baby in theworld, but when you sell your company, everything has a price and there is a professional way to understand what yours is. Please do not relegate what may be the most important decision of your life to some friend’s belief in what you should get for your business.
So, there you have it. I am not going to promise you will be able to sell your business for
what you want. But, if you can avoid some of these pitfalls, your chance of success will
be a whole lot higher. Good luck!
