There are many ways that business owners impair exit value when attempting to sell their businesses.
Here are some of the ones we most frequently see as exit-focused M&A advisors.
- Getting exit timing wrong, particularly leaving it too late when a business has gone ex-growth or when owners have become a ‘forced seller’.
- Overlooking the benefit of exit preparations covering the strategic, operational, and cosmetic improvements that buyers most like and value.
- Ignoring the possibility of an overseas buyer (as these are often the most strategic buyers who will pay the highest price).
- Failing to maintain confidentiality about exit plans prior to and during the sale process. When this happens, value inevitably evaporates.
- Offering a business for sale to direct competitors who are not interested but will use the knowledge of the sale competitively against the business in the shared market-place.
- Negotiating with a buyer who is not under competitive bidding tension.
- Using a business broker based on low fees rather than a more technical M&A lead advisor (the best advisors are rarely the cheapest advisors).
- Failing to leave some value “on the table” for a buyer following exit.
- Not following a structured sale process that maintains deal momentum.
- Taking eyes off the ball of business’s performance during a sale process. If earnings begin to miss budget in the middle of a deal, most buyers will reduce price or walk away.
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