10 Ways Owners Impair Exit Value

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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.

  1. Getting exit timing wrong, particularly leaving it too late when a business has gone ex-growth or when owners have become a ‘forced seller’.
  2. Overlooking the benefit of exit preparations covering the strategic, operational, and cosmetic improvements that buyers most like and value.
  3. Ignoring the possibility of an overseas buyer (as these are often the most strategic buyers who will pay the highest price).
  4. Failing to maintain confidentiality about exit plans prior to and during the sale process. When this happens, value inevitably evaporates.
  5. 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.
  6. Negotiating with a buyer who is not under competitive bidding tension.
  7. 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).
  8. Failing to leave some value “on the table” for a buyer following exit.
  9. Not following a structured sale process that maintains deal momentum.
  10. 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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