Why a business sale falls apart, how sellers can prevent.

There are a number of reasons why a business doesn’t close successfully.  Some deals unravel because of the seller, some because of the buyer and even more unfortunately, some are caused by third parties.  Regrettably, the reasons are numerous.  Most can be resolved.

In regards to sellers, some do not have a reason to sell and are merely testing the waters to see if anyone would purchase their business and at what price.  Because they are not legitimately interested in selling, they will not be willing to consider the buyer’s concerns or be flexible enough to overcome the many complexities involved in the transaction.

Even when owners are motivated to sell, there can be problems if they are unrealistic about the value of their business or don’t want to offer seller financing.  In either case, credibility with legitimate buyers will be lost instantaneously.  Unfortunately, some business brokers add fuel to their cause by sharing with them unreasonable expectations, often in an effort to secure a large up-front non-refundable fee.

Some sellers fail to be honest about their business or its situation.  They will try to misrepresent the financial condition of the business or they may not disclose the real reason for selling.  Even if the error is not intentional, the sudden appearance of inaccurate information can scare off the most sincere buyer. 

What can sellers do to increase the likelihood of a successful transaction?

·         Be open and honest and accurate about all things, both good and bad

·         Compile financial documents that up-to-date and accurate

·         Be able to articulate your reason for selling. Be honest and hopefully not urgent

·         Get legal commitments in order, such as leases, permits, etc.

·         Have your business broker perform an objective review of your business and it’s market value

For sellers, using a business broker means they can continue to maintain their focus on making the business as profitable and attractive as possible while the business is marketed confidentially.  In many cases sellers do not have the know-how or the resources to create and manage buyer competition.  By carefully managing the flow of information a professional business broker will help preserve confidentiality, and address the many concerns and questions buyers are often asking.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.