Ten Pitfalls to Avoid When Selling

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While this list is not all inclusive, just remembering these ten potential pitfalls will move you along the way toward achieving a successful transfer of ownership.

1. Not Minding the Store

The most important point to remember when selling your company is to keep it running as if you will always own it. More sales of mid-size companies fail because the underlying business takes an unforeseen turn for the worst. In a majority of these cases, the owner becomes preoccupied with the sale process and loses sight of the critical, day to day management issues. Considering that a sale can take anywhere from five to nine months, the sellers distraction from his business can be fatal to a deal, particularly during its latter stages. Late in the negotiation process, a buyers adverse reaction to negative reports of even a relatively minor problem could determine the entire transaction.

2. The Unfocused Effort

Time always works against you in a sales process. The longer a transaction takes, either because the owners are finding it difficult to make critical decisions, or potential buyers are protracting the process for their own purposes, the greater the tendency for significant problems arise. The sale process will always take some unexpected twists and turns, but in most situations, a good team of advisors and management can usually prepare contingency plans. The key is to be well prepared, confident and decisive, and to have clearly defined objectives.

3. Going-At-It-Alone Syndrome

Below is a summary of some of the potential hazards of handling the sale of your own business:

* Limiting the buyer universe: An owner will tend to focus on only one to two types of buyers, usually direct competitors or customers. Unfortunately, such an approach could very likely leave out many potential buyers not readily known by management. For example, interested buyers might be companies using the same distribution channels, but with vastly different products, or financial buyers, such as equity groups or individual investors.