Ten Pitfalls to Avoid When Selling

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* Creating bad blood: Negotiations can be a very turbulent process, causing bad feeling and bruised egos. An advisor is able to act as a buffer between the buyer and seller, playing the "bad guy" or being a scapegoat, if necessary, in order to maintain a level of decorum between the principals.

* Being caught off-guard: By limiting the direct contact between seller and buyer, an advisor can protect the seller from pressure to respond without proper consideration. Additionally, an advisor can offer a compromise during negotiations without being committed to it, to gauge the buyer's reaction. A seller negotiating directly forgoes this advantage.

* Lacking credibility: The involvement of a financial advisor in managing a professional sale process sends a clear message to potential buyers that thee will be competition; that delay, or similar tactics will be ineffective; and that pertinent information will be carefully prepared and presented.

4. Standing Up on a Roller Coaster

Selling your company can be one of life's most stressful experiences. Beside s dealing with the prospect of retirement, and with separation from a much-cared-for business, the owner must also face the inevitable scrutiny that his company and his business activities will receive from every potential buyer. The key here is to keep your emotions in check in the face of second-guessing and criticism. For some, that could mean almost minimal involvement in the process, at least until the final negotiations. For others, it could mean regular communication with those handling the sale, in order to clear up any speculation or rumors, which are often worse than the actual facts. In any case, being overemotional is likely to lead to rash decisions, based on the heat of the moment, rather than on to a rational agreement process.

5. But-The-Other-Guy-Got-More Syndrome

What another entrepreneur got for his company three years earlier, or what one large corporation paid for another, is irrelevant to your transaction. The market will determine what your company is worth today. Have your advisors do their homework to arrive at a preliminary valuation range, and then let the market do its work. Unrealistic price expectations are the quickest way to dampen buyer enthusiasm and ensure seller disappointment. Inflated valuations offer impede the seller from recognizing reasonable bids.