Tuesday, 9 August 2011
Why a business sale falls apart, how sellers can prevent.
In regards to sellers, some do not have a reason to sell and are merely testing the waters to see if anyone would purchase their business and at what price. Because they are not legitimately interested in selling, they will not be willing to consider the buyer’s concerns or be flexible enough to overcome the many complexities involved in the transaction.
Even when owners are motivated to sell, there can be problems if they are unrealistic about the value of their business or don’t want to offer seller financing. In either case, credibility with legitimate buyers will be lost instantaneously. Unfortunately, some business brokers add fuel to their cause by sharing with them unreasonable expectations, often in an effort to secure a large up-front non-refundable fee.
Some sellers fail to be honest about their business or its situation. They will try to misrepresent the financial condition of the business or they may not disclose the real reason for selling. Even if the error is not intentional, the sudden appearance of inaccurate information can scare off the most sincere buyer.
What can sellers do to increase the likelihood of a successful transaction?
· Be open and honest and accurate about all things, both good and bad
· Compile financial documents that up-to-date and accurate
· Be able to articulate your reason for selling. Be honest and hopefully not urgent
· Get legal commitments in order, such as leases, permits, etc.
· Have your business broker perform an objective review of your business and it’s market value