69 Impediments to a Successful Business Sale

There are at least 69 reasons why only about 1 of every 5 businesses listed for sale actually SELL

You should be aware of the following 69 obstacles that might be encountered and should be overcome or disclosed if you want to successfully SELL YOUR BUSINESS!

  1. Business Owner’s Failure to Plan for a Sale ( Fail to plan = plan to fail )
  2. No True Analysis of Actual Business Saleability
  3. Owners With Unrealistic Price Expectations
  4. No Professional Appraisal or Valuation
  5. Choosing The Wrong Intermediary
  6. Intentional Misrepresentation by Seller
  7. Sellers Unwilling to Use Professional Advisors
  8. Excessive Personal Expenses and Skimming Cash
  9. Inadequate Recordkeeping / Accounting Systems / Financial Reports
  10. Low or Inconsistent Gross Margins
  11. Inadequate Future Maintainable Earnings (FME)
  12. Owners Who are not Committed to a Sale
  13. Burned-Out Owners Ruin Business Value
  14. Owners Who Try to Sell the Business Themselves
  15. Inadequate Marketing and Sales Efforts
  16. Debtors- out of control or many bad debts – reflect on you and business
  17. Creditors –Poor relationship and poor payment of invoices
  18. Undisclosed Liabilities and Debts
  19. Unresolved Legal Issues
  20. Bad Timing – Waiting too Long to Sell
  21. Not Involving Professional Advisors Soon Enough
  22. Sellers’ Lack of Emotional Control
  23. Sellers without a Business Plan
  24. Asset Value too High vs. Return on Investment
  25. No Manuals / Processes or Systems In Place
  26. Losing Focus – Business Decline during Sale Process
  27. Sellers’ Impatience with Sale Process
  28. Sellers Don’t Understand Buyers’ Motivations
  29. Trust Issues from Inadequate Disclosures from owner
  30. Large Working Capital Requirements
  31. Poor Location, Lease too Short or No Lease at all
  32. Difficulties in Transferring the Lease of Premises
  33. Current Premises Over Priced – too much rent, Not Market Value
  34. Inadequate Preparation for Due Diligence
  35. Web site, Social media Inadequate
  36. No Detailed Plant and Equipment list
  37. No Detailed Stock / Inventory List – over valued (must be cost price)
  38. Employee/ Labour Problems
  39. Technological Obsolescence
  40. Owners Don’t Sell Business’ Growth Potential
  41. Lack of Compliance with Regulatory Authorities (Franchisors, Licensors, etc.)
  42. Lack of Barriers to Entry – very easy to start similar business
  43. Changes in Competitive Threats or Business Environment (market share)
  44. Sellers’ Unwillingness to Stay for a Transition Period and offer adequate training
  45. Lack of Compliance with Regulations (Environmental, Health/Safety, Taxes, etc.)
  46. Lack of Flexibility in Negotiations
  47. Owners Forced to Sell Due to Factors Beyond their Control
  48. Failures in Negotiating Representation and Warranties
  49. Inflexibility in Structuring a Deal
  50. Owners Unwilling to Provide Partial Financing or leave something in
  51. Environmental Risks from business
  52. Failure to Facilitate Closing on a Timely Basis
  53. Failures in Negotiating Deed of Restraint Agreement
  54. All buyers will evaluate your business on fact, not hearsay or fiction
  55. Price – Critical step in the Sale process –Not many buyers look at unreal business prices
  56. You must satisfy the financier or money person ( Bank, Partner , Family, Friends etc)
  57. Selling what you sell usually takes years of sales training, product knowledge, conferences and experience, you will also require that level of expertise to sell your business
  58. If you currently have a successful business, you could probably learn how to sell your business if you have 4 – 5 years to do so.
  59. Marketing strategy for each business is different
  60. Qualifying the buyer is very important, suitability, experience, finance people skills, staff management
  61. Most Business Value is directly related to profitability and risk to obtain that profit
  62. Business dependency on the owner must be reduced or eliminated as you do not usually go with the business – that is why you are selling it
  63. Presentation or Perception is everything
  64. Leave the emotion aside and concentrate on the profit – that’s what a buyer wants to see
  65. Having your business appraised buy a certified business valuer using the same principals used to do an unbiased valuation is critical – No vested Interests
  66. Totally a buyers’ market – baby boomers are all trying to sell / get-out
  67. Have you overcome RISK – future sales / longevity, customer risk, staff risk, economic risk, technical risk, systems risk, supply risk, economic risk, market risk, tenure risk, owner risk
  68. If your business is not making a fair and reasonable wage, it probably cannot be sold!
  69. You are constantly being judged and under scrutiny from buyer – buyers due diligence!

Note: This information is given as a guide only to possible obstacles any business may face in its intended sale process.

If you would like to discuss anything in this article with me please call me or email me here>>