Selling a business is more a marathon than a sprint, but it shouldn’t feel like a bad first date. There can be a lot of pitfalls when you are selling your life’s work, and it’s best to retain a company like Hallmark Business Brokers to help you navigate the barriers to a successful sale. There are things you need to be aware of when thinking about or proceeding with the sale of your business, because these issues can be show-stopping if unrecognized:
Make sure earnings are correct and realistic — Your accountant may have a habit of adding back one-time expenses. These could be expenses such as a foundation repair on the building, a major plumbing overhaul to meet new codes, or an exterior refurbishment again due to code changes. Though these add-backs may be accepted accounting practices, they can inflate earnings and mask the real earning potential of the business. Make sure your non-recurring expenses are clearly stated as being exactly that to prevent confusion.
Buyers need assurance that earnings are sustainable — No buyer wants to assume the burden of a business only to find that the earnings stated by the seller aren’t realistic or sustainable. Nor should a seller represent earnings as consistent if they are based on a single customer or one-time contract. Buyers will scrutinize the earnings statement to be confident the business will sustain itself, or better yet will grow with time.
Be prepared for buyers to dig deep into your business — Buyers don’t want to be surprised by hidden expenses or accounting errors after the purchase is complete. As a seller, you must be prepared for detailed examination of your business by every potential buyer who wants to be sure there is no legal action, product issues, or any other potential problems that would burden them after the sale.
Put yourself in the mindset of a buyer to be most effective — Take the time now to put yourself in the position of a buyer who is looking at your business. If you see problems now, and don’t make the effort to correct them, potential buyers will also see them and you could lose the opportunity to sell your business.
And finally, retain the services of Hallmark Business Brokers. We are experienced in connecting sellers with high-quality buyers, and we understand the myriad issues which can occur during a business sale transaction. We have seen many problems and solutions that you may not have considered, so let Hallmark Business Brokers work with you to get you the most value for your business.