When it comes time to sell a business, not everything goes as planned. Having Unexpected events when selling a company is not uncommon for CEO’s and Business Owner’s. However, you may be one of the lucky ones. And find that selling your business is a streamlined process. But most CEO’s looking to sell a business find they can expect the unexpected. Let’s take a closer look. Here are some of the top surprises CEO’s experience.
Unexpected events when selling a company #1-
Surprisingly Low Bids
CEO’s looking to sell their businesses need to be ready for almost anything. One of the larger surprises that CEO’s face are surprisingly low bids. Don’t let low bids shock you. Read more here about how to increase value in your business. And get much higher bids. Click the link!
Unexpected events when selling a company #2 –
A Huge Time Commitment
CEO’s have to a substantial amount of work to do before their company goes to market. Responsibilities like the confidential information memorandum and management presentations are highly important. They should be well thought out. Creating a list of potential acquirers also requires a lot of research. The confidential information memorandum is considered the cornerstone of the selling process. A CIM is typically at least 30 to 50 pages in length.
Most business intermediaries expect the potential acquirers to submit their initial price based on the information contained in the memorandum. Management presentations are also time consuming, but it is common to have these presentations ready before the final bids are submitted. Ideally it is best for the CEO to show the benefits involved in combining the acquirer and the seller as well as the future upside for selling the company.
Unexpected events when selling a company #3 –
The Need for Agreement from Other Stakeholders
CEO’s are able to negotiate the transaction, but the sale isn’t authorized until certain shareholders have agreed and done so in writing. Until the Board of Directors, shareholders and financial institutions who may hold liens on key assets, have agreed to the deal, the deal simply isn’t finalized. Often this legal necessity turns out to be an issue that gets in the way of a successful deal.
Sellers can take their “eye off the ball” during the time-consuming process of selling a company, however, this can be a serious mistake. CEO’s must understand that potential acquirers will be examining monthly sales reports with great interest. If potential acquirers notice downward trends they may want to negotiate a lower price. No matter how time consuming the sales process may be, CEO’s have to maintain or even accelerate sales.
Selling a business can have a wide array of surprises. Avoiding these kinds of issues is paramount. The good news is a CEO can drastically reduce them. Proper prior planning prevents poor performance. It is vital to keep in mind that the best practice for selling a business is preparation and diligence. There can still be many surprises when selling a business. When selling a company. It is always a prudent move to hire or consult with a business broker or M&A specialist. Many offer free consulting and will help you prepare. Their goal is just to build a relationship. In hopes one day getting a sell side engagement.
Cody Weaver President at Business Acquisition Experts- “It is our goal to ensure the successful exit of as many fellow entrepreneurs as possible”