September 22, 2024
Selling your business is one of the most significant decisions you can make, and I want sellers to do it with clear eyes.
Usually, I’m the buyer.
But over the years, I’ve found that sellers who address these issues are easier to deal with during a transaction.
They end up making more money.
I end up with a smoother process.
We both win.
Here are 11 regrets 75% of business owners face when selling—plus a hidden one no one mentions—and how to avoid them all.
Not Prepared
“By failing to prepare, you are preparing to fail.”
Benjamin Franklin
Impromptu sales, without a strategy, usually flop.
Plan it out:
- Get an advisory team together
- Lawyer
- Tax Advisor
- M&A Advisor
- Wealth Manager
- Dedicate Time to planning
- Create and ideal buyer profile
Business Isn’t Optimized
“You can’t knock on opportunity’s door and not be ready.”
Bruno Mars
Buyers underwrite current performance for valuations.
- Streamline Operations and Expenses
- Organize financials to simplify due diligence
- Fill gaps in the leadership team
No Growth Story
“The most powerful person in the world is the storyteller.”
Steve Jobs
The potential matters, not just present performance.
Keep and eye on the future:
- Update growth plans
- Have compelling strategic narrative about the future
- Back it up with credible financial plan
Painful Process of Due Diligence
“Paperwork may be dull, but it forces us to listen and learn.”
Lyndon B. Johnson
Don’t let the deal sink business performance.
Juggle it all:
- Protect your core operations team from disruption
- Compartmentalize diligence as much as possible
- Look outside the company to support the diligence effort
Tax Oversights
“It’s not how much you make but how much you keep.”
Robert Kiyosaki
After-Tax proceeds are all that matters.
Plan for tax obligations:
- Consult tax professionals
- Understand your optimal structure
- Focus on what maximizes your after-tax proceeds
Poor Negotiations
“In any negotiation, there is give and take. It’s important to understand you can’t have everything.”
Henry Kissinger
The process is psychological and financial.
Don’t get outmaneuvered:
- Lean on professional advice
- Understand many levers may exist
- Ask questions until you’re comfortable
Wrong Buyer
“It ain’t me you’re looking for.”
Bob Dylan
All money is green, but not every buyer is right for your business.
Find the best fit:
- Use advisors who know your industry and have a big network
- Clarify the core values and direction of your business
- Align with buyers who get your whole business
Unclear On Your Desired Role
“If you don’t know what you want, you end up with a lot you don’t”
Chuck Palahniuk
Uncertainty in your post-close role can leave you disillusioned.
Minimize regrets:
- Know what you want
- Are you staying in an advisory role? Completing exiting?
- Clearly define your role and boundaries
No Post-Sale Plan
“Every battle is won before it is fought.”
Sun Tzu
Your business also needs a plan for life after the sale.
Strategically plan ahead:
- Define the vision alongside the buyer
- Develop a 100 a post-close plan
- Give your team clarity and purpose
Your Emotions
“Life is a roller coaster. There are ups; there are downs. There are hills; there are valleys, peaks, and so on.”
Martin Landau
Exits are emotional roller coasters… then they are vacuums.
Look beyond the deal table:
- The process has ups and downs. When it’s over, it can leave a void.
- Knowing what you want will help.
- Maintain balance. Don’t let the deal overtake your life.
Sale Price
“If you only look at the price, you’re missing the big picture. It’s like buying a ticker to a concert without checking if the band is any good.”
Michael Bloomberg
We tend to overvalue things we own.
Avoid this by:
- Do thorough research on the buyer.
- Recognize your exit is price AND terms.
- Keep the risks of your business in mind.
Bonus
These 11 regrets distract sellers from the reason they wanted or needed to sell in the first place.
Remember your why. Keep your eyes on the prize.
PS: Your significant other will thank you.
Conclusion
56% of sellers who do it alone come out of the deal satisfied.
What about those who used an M&A advisor?
78% satisfaction rate.
Have you regretted part of a sale? Tell me about it.