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:

  1. Waiting until next year. You believe you will always do better, show improved results and be worth more. As I write this blog, I do not think there has been a better time in my business career to sell a business. And if you wait until you have captured it all and there is no more growth left, your value fades.
  1. Forgetting it’s a process. You have to give it a chance to work. Every transaction has emotional highs and lows and entrepreneurs are loathe to wait it out. You need patience and trust in the process.
  1. 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 industry best.
  1. Too much focus on the past. Buyers are only interested in the past as an indicator of the future. If all you had was historical operations and it was all in cash on your balance sheet, all  anyone would pay you is the value of that cash dollar for dollar.
  1. Poor deal structure. Please let the professionals handle this. It is what you get at the end that counts; not just the price.
  1. Doing the deal yourself. You probably wouldn’t sell your own house; why do you think you can sell your business? Get a qualified, knowledgeable agent.
  1. Ignoring your warts. Perform due diligence on yourself and make sure you understand what is good and not so good about your business. Then develop a plan to address the concerns.
  1. The wrong deal team. This is the transaction of a lifetime. Surround yourself with the best.
  1. Sellers’ remorse. I have blogged about this before. You won’t sell if you do not have something 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 the world, 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!

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