Business

Avoid these 3 mistakes when selling your business

Avoid these 3 mistakes when selling your business

As a savvy New Jersey business owner, you know what it takes to run your business successfully, drive sales, and drive growth. However, selling your business requires a different set of skills. You only have one luck and you don’t want to be wrong. If you are considering or pursuing a sale, it will be one of the most important transactions of your life and you are unlikely to make any mistakes. here is aHere are the top three mistakes many business owners make during the sales process — and how to avoid them.

Mistake #1

Not being well prepared

Business owners who fail to plan ahead for a sale transaction often leave an important amounit of value on the table. Preparing and planning requires looking deeply into all facets of the business through the lens of a potential buyer. With your advisors, assess how buyers would see your business from the outside, taking into account their point of viewtifs, protocols and business goals.

Thorough planning and preparation reduces the likelihood that the potential buyer will be the first to identify problems and use them as bargaining leverage to reduce the value of an offer. You want to control tit narrative instead of playing catch-up and defense.

When you take the time to analyze your business from a buyer’s perspective, it gives you the opportunity to avoid what could be damaging issues. Some of these considerations include obtaining supportabfinancial, ensuring that all patents and trademarks are current and protecting key employees with a non-competition or non-solicitation agreement.

Mistake #2

Underestimating the value of your business

Owners who do not fully understand their business value often leaves 20% to 50% of its value on the table.

As a seller, it is your responsibility to paint a compelling picture of the future so that the potential buyer can understand the accretive value of your business. The key is to understand what the business applies to the buyer, considering their economics and potential for the business to grow and increase its value and position.

Buyers also tend to pay more for an offer that they find competitive. For the seller, a competitive process offers an option, affgiving them the ability to increase the value of the business, while negotiating key terms of the deal, ensuring an optimal outcome.

Mistake #3

Quickly take a so-called “offer you can’t refuse”

Business owners are often approached by buyers looking to acquireQuickly send them an “offer you can’t refuse.” If this happens, take a step back and analyze the offer with the help of a team of experts.

Consider what value factors are attractive to this buyer and whether there might be other interested buyers. An offer may “sound” compelling, but without any comparison, you have no idea how much you could earn if a competitive process were launched.

Abut the authors: Ari Fuchs is Managing Director and Quality Manager of the DAK Group (www.dakgroup.com), a Rochelle Park-based investment bank specializing in mergers and acquisitions of private companies. Contact him ayou [email protected]. Alain Scharfstein is president and founder of the DAK group. He has negotiated over 750 transactions in a wide range of industries. Contact him at [email protected].

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