What not to do when selling your business

You’ve got five years of accounts neatly bound, your business premises smell of fresh paint, no member of staff is causing you grief, the computers are up to date and your order book is filled. What could possibly go wrong? 

Unfortunately, anything and everything. But here are 9 not-so-obvious tips to help you towards your goal.

Don’t: 

  • Attempt to sell privately. It’s unlikely you’ll have the relevant experience, contacts, time, patience and energy. Instead, engage a recommended business agent.
  • Sell if you are going through a divorce, bereavement, or a family member is ill. You’ll be emotionally vulnerable when you need to be thinking clearly and calmly.
  • Accept the first offer no matter how tempting. You may get a higher offer, or one without onerous conditions, such as the remuneration being dependent upon the future performance of the business, or someone may have more relevant background to your business.
  • Get too friendly with your chosen buyer(s). Remember the adage: familiarity breeds contempt. Even if the buyers seem easy-going there are bound to be misunderstandings and/or unreasonable demands. It’s easier to negotiate if you stay businesslike. Avoid alcohol at meetings, except when you exchange contracts. Then you can bring out the bubbly!
  • Allow the new buyers to change your name and logo (your intellectual property) unless you have all the money up front. This clause should be written into the contract. If not, it gives the buyers freedom to choose an inappropriate name and your once-loyal customers will go elsewhere.
  • Allow any ‘capping’ if you are on a pay-out to turnover scheme. Solicitors often advise their clients (your buyers) to cap the turnover, thinking they are saving them money, but solicitors are not sales people. Why would you introduce customers to your old company after a certain figure is capped if there is no financial incentive for you? You and your buyers would both be in a lose-lose situation.
  • Take everything your potential buyers tell you at face value. In these circumstances it’s human nature for them to tell you what you want to hear. They’re also on their best behaviour. Practice filling in the gaps of what they don’t say. Then ask questions.
  • Begrudge paying the professionals. If they do a good job for you they deserve their fee. Get the best advice you can possibly afford.
  • Ignore your gut instinct. This is your most powerful weapon to help you choose the right buyer who will honour his/her obligations to you, and continue with the success of your business. Any doubts, walk away.
I do wish you the very best of luck.

Seller Beware – How Not To Sell Your Business by Denise Barnes is published by Biteback Publishing, priced £12.99, and is also available as an e-book for £3.99.

To buy a copy of Seller Beware for the discounted price of £8.99 visit Politicos and enter the code (REAL) at the checkout.

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