As an antidote to overwhelming amount of advice available on how to sell your business, this article is rather set to consider how to get it completely and unutterably wrong.
Based on seeing some of the following antics on numerous occasions, I can tell you this is the fool proof way to failure.
Get off to a falling start, why don’t you either do this deal yourself, or better still get your auditor?
First impressions count so make sure you have a badly presented information memorandum.
Some sure fire killer blows include:
- It’s so big you can’t download it;
- Its pages and pages of words;
- There is no index of contents; and
- It’s all written about the past and in business babble.
In order to bed down this impression, make sure at the management presentation
you discuss the product or service in detail and don’t cover in any sort of depth the financial future potential. Don’t bring your team, then it looks like you are a one man or woman show.
Do all the talking; better still, talk over the prospective buyer.
Now that bad impressions are securely in place, you may get a desperate offer.
Make sure this doesn’t come to fruition:
- Be super greedy in your expectations, particularly thinking, “well, I wouldn’t pay that myself”;
- Say you will absolutely do no more than the minimum in a handover; after all, you can’t wait to get out of the place;
- If you do have any management, and best if you don’t of course, then tie them into the buyer with onerous contracts; and
- Have all your business, with a select few customers ideally, with no contracts in place.
If, unbelievably, you get to completion, so to truly finish off the process:
- Change your mind at the last moment on everything from price to deal structure;
- Refuse to give any warranties or indemnities of any sort; and
- Let your lawyer do all of the commercial negotiations.
I think that should about do it. Done deal… not.
Jo Haigh is head of FDS corporate finance services and the author of ‘The Financial Times Guide to Finance for Non Financial Managers’.
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