Did you just begin to think about selling because someone made a pass at you?
Did you have a major business deal fall through and you have decided you’ve had enough?
Have you just read about someone receiving lots of money for a similar business and you imagine yours is worth as much?
At SMART Group Houston, we want to help you avoid the mistakes that many owners can make when they consider selling their business.
Exactly what are the Top 10 mistakes? Here are three. (I’ll give you the rest when we meet).
- The owners have an unrealistic price in mind: Recent surveys indicate that few companies have a current, accurate valuation. Half of the time owners are unrealistically high in their asking price, and the other half of the time they are low.
- The company is not positioned for sale: Organization, growth opportunity, reputation, market conditions, and industry leadership, are some of the many intangible qualities investors appreciate. Documenting improvements that could be made by an investor with new capital helps you to better position the company and increases value. There can be a swing of 50% or more in the sale value if the company is solidly positioned for future growth.
- Don’t be the first to mention price: One cardinal rule of negotiating is to never be the first one at the table to mention price. An experienced acquirer, who sees the future potential, may have a higher price in mind. Value is very subjective. You will always regret “leaving money on the table” if you make this pricing mistake.
Used with permission of Alliance of Merger and Acquisition Advisors.
Knowledge is not only power, it’s profit too
As an objective party, we can help you step back and look at your company from the buyer’s perspective. Are they interested in you because they think it’s a “good deal?” Or, is your company a good fit for them strategically and would offer them a competitive advantage? The answer to these questions can have significant impact on the value they place on your firm.
Selling to a public company is very different than selling to another closely-held firm or a private equity group. Their motives and processes are different and certainly the time schedule will be different. We can help you navigate these rough waters while you focus on what you do best, the operations of your successful firm.