If you are selling your business, it isn’t just the opinions of business buyers you need to contend with.
Business buyers typically come with an entourage – an entourage with very strong feelings about the sale of small businesses.
Who’s in this entourage?
There are spouses and in-laws who are very interested in how much money is going to be spent on a new business venture. There is a severely inexperienced real estate agent friend who wants the commission for helping with the purchase of the business – and as this is the friend’s first foray into business transactions they have no idea what they’re doing. There’s an uncle who’s a CPA for a school district who knows absolutely nothing about business transaction accounting – and this uncle will happily advise your buyer that your very fairly priced business should only be listed for a third of what it is. There’s a buddy from the gym who read an article about earn-outs and now thinks every small business sale should be done that way. The list can go on and on, but you get the drift.
This well-meaning but ill-informed entourage can play havoc in a business transaction. They can undermine negotiations and cause rewrites of contracts. They can even kill a deal. While they will always be there – there are things you can do as a seller to combat their terrible advice.
What can you do? Be prepared.
You can hire an experienced and professional business broker who will be your buffer with this entourage. They can keep inexperienced pseudo-brokers out of the deal, help you hire the right professionals to get your business ready to sell and they can use their experience to negotiate on your behalf with whatever entourage member is currently causing issues.
The buyer’s inexperienced CPA uncle won’t be necessary if you’ve had a CPA who is familiar with business transactions and valuations set up your books so any buyer can clearly see where the cash flow is coming from.
You can have your business records in order, with everything from receipts to contracts neatly organized and all of your financial data inputted to accounting software that will allow any buyer to see the day-to-day, month-to-month and yearly numbers.
You can also mentally prepare for this inevitable part of selling your business. If you know that ridiculous advice is inundating the buyer’s side you are less likely to be offended past the point of no return when some of that ridiculous advice starts to mess with your deal. By staying patient and staying the course you are much more likely to have a successful closing.
The point here is your best course of action when dealing with a buyer’s entourage is patience and preparedness.
Do you have more questions about how to prepare your business for sale? Would you like to know more about what a business broker can help you with? Ask us! Leave any questions or comments here and we would be happy to help.
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