Brian Slipka, the CEO of Sunbelt Business Advisors and the True North Family of Companies, offers valuable insights for those looking to sell their business. The process of business transition is fraught with obstacles and challenges, and it is important to be prepared for potential deal-killers that could derail the sale of a business. One commonly asked question in the industry is whether a deal has died three times yet, highlighting the reality that many deals fall through multiple times before being finalized.
Five deal-killers to avoid when selling a business include negative factors uncovered during the due diligence process, deal fatigue, funding issues, third-party barriers, and failing to define how much net working capital is included in the sale. Negative factors such as a drop in profit or revenue can deter buyers, while deal fatigue can set in if negotiations drag on, leading to decreased enthusiasm and eventual deal collapse. Funding issues, such as unclear capital stacks and lack of secured funds, can also hinder the sale process.
Third-party barriers, such as issues with landlords, suppliers, customers, and governmental authorities, can pose challenges for buyers and sellers alike. It is crucial to address these third-party concerns and establish clear expectations early in the process to avoid potential roadblocks. Additionally, failing to define how much net working capital is included in the sale can lead to misunderstandings and deal failures, as buyers may expect a portion of working capital to be included in the price.
To prevent deal-killers and improve the chances of a successful business sale, sellers should maintain consistent communication, establish realistic timelines, and engage proactively with buyers. Setting clear expectations, asking pointed questions about funding, and addressing third-party concerns are also crucial steps in ensuring a smooth sale process. By avoiding common deal-killers, sellers can increase the likelihood of finding the right buyer for their business and securing a successful transition.
It is important for business owners to seek advice from licensed professionals regarding their specific situation, as the information provided here is not investment, tax, or financial advice. The Forbes Finance Council, an invitation-only organization for executives in accounting, financial planning, and wealth management firms, provides valuable resources and expertise for those navigating the complex world of business transition.
