How To Sell A Business Quickly
Today we are going to do a business sale autopsy.
We’re going to take an analytical scalpel to 2 businesses that were listed for sale. Comparing 2 business, 2 VERY different approaches that resulted in 2 VERY different outcomes.
Let’s get started…
While no two businesses are ever identical, I’ve selected two mature businesses that I feel are representative a “typical” small business, the type of business I believe you likely own. The intent of this business sale autopsy is to compare two businesses that were listed for sale, compare the owners approach to selling their business and how all this contributed to the stark difference in outcome.
It is important to point out, as is normally the case, neither business owner had any experience selling a business.
Business Owner Profile
Let’s first profile each business owner and note the major differences in their attitude and approach to preparing their businesses for the sale.
- Owners Role: Overseer of operations, accounts payable and accounts receivables.
- Preparation work done for the sale: None. (The owner believed that no time or money needed to be spent on this activity. Furthermore, they incorrectly believed that a buyers would be able to “…work out the business opportunity for themselves”).
- State of Readiness: Business Unprepared. Owner Unprepared.
- The Owners Role: Overseer of operations, accounts payable and accounts receivables. However, ALSO demonstrated that they were prepared to “jump-in” and help staff on mission critical activities.
- Preparation work done for the sale: A thorough Review & Valuation (RAV) was completed 2 years prior to business listing process. With reference to this RAV, the business owner worked diligently at polishing every aspect of the business in preparation for the sale.
- State of Readiness: Business Prepared. Owner Prepared.
As you can see each business owner had a very different attitude to the business selling process.
For each business, now let’s discuss some key observations made throughout the business selling process. These key observations, and owner idiosyncrasies, in my opinion contributed to the final outcome for each business.
- Owners Overall Attitude: Combative, Argumentative and opinionated.
- Toward the end of the business listing process: Suddenly became insistent on taking certain assets from the business that were necessary for the continued success of the business. (Assets owned by the business, not the owner of the business).
- Validation of Owner Expenses: Proof / validation of Owner Expenses met with resistance. (RED FLAG). Clearly this raised concern with the buyer and the business broker and it would have also raised concerns with the buyers lender.
- Support received from the company Accountant: Not Supportive At All. This further solidified concerns the buyer and business broker had about the business and business owner.
- Owners Overall Attitude: Productive and Productive.
- Toward the end of the business listing process: It remained clear throughout the business listing process that all the business assets would be included in the sale.
- Validation of Owner Expenses: Promptly responded to every request with supporting documentation.
- Support received from the company Accountant: Very Supportive, which resonated positively with the buyer.
It is very important to point out, the marketing plan and approach for each business was identical.
So now let’s discuss what the net result of what all this, ended up being:
- Duration of business listing (from start to finish / conclusion): 12 months.
- Total number of potential buyer inquiries: 34.
- First formal Offer received (from start of business listing process): 9 months.
- Number of serious buyer inquiries who presented a formal offer: 1.
- Status at End of business listing: Business never sold.
- Details of the Offer: Only offer reflected an amount that was $400,000+ LESS than what the business owner believed their business was worth.
- Duration of business listing (from start to finish / conclusion): 3 months.
- Total number of potential buyer inquiries: 35
- First formal Offer received (from start of business listing process): 24 days.
- Number of serious buyer inquiries who presented a formal offer: 6
- Status at End of business listing: SOLD
- Details of the Offer: Sold for what the business was listed at / highest valuation amount.
It is clear to see that preparation and attitude, of everyone involved in the process, has a direct effect on wether a business will sell or not.
I promise you, if you choose to “wing-it”, if you choose to think that a buyer can “work it out for themselves” and will willingly pay a large sum of money for your business based on its quote, unquote “potential” – you will never sell your business for what it could be worth.
On the other hand, I promise you, if you take the necessary time to properly prepare yourself and your business for the sale, you have a positive attitude and you respect the expertise of the advisors you hire, you will attract multiple offers and you will sell your business for the highest possible price.
There really are so many advantages to properly preparing yourself and your business for a sale. Take the time to educate yourself, take the time to watch my other Youtube videos and take the time to learn about my selling a business course. I can help you. Furthermore, I might even have a buyer right now who’d be interested in learning more about your business opportunity!
Let’s Summarize The Discussion.
An unprepared business, and unprepared business owner = a very long business listing process, “might” attract 1 buyer, will result in a very low offer.
Prepared businesses, prepared business owners (with great attitudes) = a very short business listing process, will attract multiple offers from serious buyers, will result in the business selling for the highest possible price.
The choice is yours as to how you want to proceed.
Thank you for taking the time to read my article A Business Sale Autopsy!
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