If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.
Big Mistake #4: You are letting buyers get to due diligence without knowing if they are qualified to actually buy the business.
If you are trying to sell your business on your own, this is a situation that you should cause you some concern.
Why? By going it alone, you will be exposed to buyers who may not be able to pay, buyers who are just kicking tires and buyers who assume they will be able to get third-party financing when they can’t. Every seller is going to come across buyers like this, but if you don’t find out ahead of time you could get stuck with your business off the market in due diligence for no reason.
What is due diligence? Due diligence happens when a seller gets a serious offer from a buyer and accepts that offer. What happens next is the business gets temporarily taken off the market so the buyer can conduct a thorough investigation of the business. If, after the due diligence period, the buyer wants to proceed with the sale, the business transaction moves to closing. What can happen in these situations when a buyer has not been qualified is the business gets pulled from the market for several weeks for due diligence only to have closing not happen for lack of funds.
How can you avoid this situation? Use a professional business broker. They are able to determine if a buyer is a truly serious buyer with access to the adequate funds to purchase your business. They will weed out buyers who don’t have the funds or are hopeful for a third party loan from a bank that probably won’t happen in this economic climate.
Do you have questions about how to find buyers with enough capital? Are you wondering if you need a business broker or if you will be able to go it alone? Please leave a question or comment here and we will be happy to help you with your business sale.
Want to read Mistake #1: The Cold-Feet Seller? Click here.
Want to read Mistake #2: The Box-O-Paper Financials? Click here.
Want to read Mistake #3: All-Cash Greed? Click here.