Selling a business can feel complicated and overwhelming. It’s normal to have some concerns when you begin. No deal is a certainty, but working with an expert in the industry who is deeply knowledgeable about the business sales process can increase the odds of a successful closing.
Here are some of the most common concerns sellers express, and how a skilled advisor can address them.
The Sale Will Distract Me From My Work
This is a very reasonable fear. Selling a business can become a full-time job in its own right. But owners should not take their eye off their business. A distracted owner can undermine their business, leading to a lower valuation.
Skilled advisors know that the 6-12 month time line of a business sale can be distracting. That’s why they give owners their expertise, even after hours. Advisors know that owners work around the clock, so they’re often willing to, too. The best advisors allow owners to maintain their business status quo. They free owner time by navigating the ins and outs of the sale. In so doing, they ensure the business is never compromised.
A Confusing Financial Mess
Messy financials don’t have to kill a deal, or even lower valuation. Sellers and an intermediary need to talk about the company’s performance, as well as its anticipated valuation, often and early. Sellers need clear expectations about anticipated value. They must understand the financial health of their business.
Price is often a product of cash flow and clear accounting. An advisor helps owners deal with financial messes by offering an early and confidential picture of operational costs, recurring expenses, and total value.
Streamlining financial practices in anticipation of a sale can save time and prepare you for due diligence.
Unrealistic Expectations About Business Valuation
Sale price isn’t just about business value. The market also plays a role. Business owners are deeply emotionally invested in their companies. Sometimes this produces unrealistic expectations about a business’s value. Owners may also fail to examine other factors, like overall market strength. Advisors have a keen understanding of how the overall marketplace affects value. This can help sellers achieve a higher valuation.
Many businesses are complex. The advisor’s role is to offer a compelling deal that’s free of misrepresentations. A good advisor has a clear understanding of what companies generally sell for. This empowers them to assist with valuation, and to help locate buyers in the market for a company like yours, at a price that’s appealing.
Additionally, an excellent M&A advisor also has excellent communication skills. These negotiation and communication skills can drive up the value of a business and instill confidence in a buyer.
Your advisor will collaborate with you and create a teaser and Confidential Information Memorandum (CIM) that includes both soft and hard value-adds. The way you communicate value drivers can dramatically affect terms and price.
The Process is Confusing and I Don’t Know How to Navigate It
Business owners are industry experts, leaders in their company, and highly competent at daily operations. That doesn’t mean they know much about successfully selling a business. They don’t need to. An advisor won’t expect you to be an expert. Instead, their role is to offer you comfort as you navigate the deal process.
Many business owners experience intense anxiety as they pursue a sale, particularly during moments of uncertainty or conflict. Every deal comes with a unique set of challenges. Being a good advisor demands a proactive, reassuring stance. An advisor who reassures sellers with their expertise frees the seller’s time, alleviates anxiety, and allows the seller to continue successfully running the business.
This prevents the sort of loss in sales momentum that can spoil deals. Buyers can sense uncertainty, and when they do, they lose interest. An advisor stops this process before it begins, instilling confidence and ensuring the deal is appealing and efficient for all parties.