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4 Mistakes To Avoid When Selling Your Business

By: Dan Coconate

 

Young business couple shaking hands having a deal with salesperson at the stand buying or renting car in the showroom

You put a lot of time and effort into building your practice to be what it is today, but you might be looking to retire or move on to a new business venture. Regardless, you want to make the right moves when it comes time to sell. Here are some common mistakes to avoid when selling your business and what you can do to work around them.

Neglecting Business Valuations

Many private practice owners will try to jump right into the sale, but it’s worth the time to go through a valuation process. Understanding the worth of your business is fundamental for setting a realistic and profitable selling price.

A valuation that’s too high may turn away potential buyers, while undervaluing your company could result in a significant financial loss. You can work with a professional broker to go over your assets, liabilities, cash flow, and market position. Then, you can establish a well-grounded asking price.

Not Meeting the Potential Buyers

two men looking at a contractWhile it might be tempting to rely solely on brokers or advisers, it’s a good idea to meet potential buyers and have a direct interaction with them. Meetings allow you to gauge the buyer’s intent, seriousness, and suitability to carry on your business legacy.

These face-to-face interactions also provide an opportunity to address any of the buyer’s concerns and establish a rapport for a smooth transition. You can ask potential buyers questions and figure out if their values align with yours. Skipping this step could lead to misunderstandings and jeopardize the sale.

Ignoring Potential Deal Structures

A big mistake to avoid when selling your business is to fixate on the selling price without considering the structure of the deal. The terms, whether it be cash upfront or a payment plan, can impact the ultimate success of the transaction.

Tax implications can vary with different deal structures. Think about how you’ll structure payments and the post-sale responsibilities you might retain.

Disregarding Professional Advisors

Attempting to sell a business solo is a risky endeavor. You need to consider legalities, finances, negotiations, and every other aspect of the sale that may demand specialized knowledge. Enlisting professional advisors, such as business brokers, accountants, and lawyers, can help you avoid costly mistakes. They will advocate for your interests, provide critical advice, and steer complex negotiations, which can contribute to a more favorable sale.

Selling your business is a high-stakes undertaking that requires careful planning and execution. With forethought, discretion, and the guidance of professionals, you can transition out of your business smoothly and step into the next phase of your career or retirement with confidence and financial security.

Published: June 13, 2024
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