Mistakes When Selling A Business

Are you selling a business in California's lower middle market segment? Are you wondering how to avoid not getting what you deserve for your mid-market enterprise?

Maybe you know you could get a good price right now, or you may be ready to move on to new projects. It may be time for you to retire, or you may have some bills to pay off.

It's important to do your homework and make sure you're getting a fair business price. There are some common pitfalls that entrepreneurs sometimes encounter when they're selling their lower mid-market business in California.

Here's what you'll want to avoid.

1. Waiting Until It's Too Late

You may know that it's coming. Your lower mid-market company no longer intrigues you and the work is becoming stale. But you don't want to wait until you're burnt out to exit your company.

Your M&A Buyers will know if your business is starting to go south. Make sure you time your sale at a point when your mid-market business is still humming, even though you sense you'll be ready to move on soon.

2. Not Planning Ahead

If your potential buyers are doing their jobs, they will expect you to have done yours. You're not going to get a good price for your business if you don't have something legitimate to show to prospective buyers.

Make sure your financial records are up-to-date and accurate. You'll also want to keep a portfolio of your sales and updated records at the ready.

When a prospective buyer realizes that they will have plenty of information they can use to hit the ground running, they'll be ready to offer you a higher price for your business.

3. Giving Away Important Information Without an NDA

Selling a California business is critical, and you'll want to do whatever you can to get a great price for something you've worked hard to build.

However, you'll want to do your M&A Due Diligence and have prospective buyers sign a non-disclosure agreement before you tell them too much. If they aren't really serious, they can use sensitive information against you by giving it to your competitors or even using it to start their own business.

4. Not Pre-Qualifying Buyers

Pre-qualifying your buyers ahead of time can prevent you from giving information about your business to the wrong people. You'll want to see a prospective buyer's financial information, as well as their credentials and professional history.

You may be able to discuss general details of your business with anyone, but it's important to have pre-qualifying information in place along with confidentiality agreements before disclosing the details. This way, you can be sure the person you're having a serious conversation with deserves your time and energy.

5. Misrepresenting Your Business

Selling a business may seem like another big transaction that you've got to talk up to your client. Yet misrepresenting your business could cost you in the long run. 

Resist the urge to exaggerate your numbers or minimize problems. This could lead to distrust and even legal action against you.

If there are problems or concerns with your business, you'll want to discuss them with your attorney first, and then get the information to your qualified business buyer in a responsible way.

6. Going It Alone

Selling your business is important, and even if you have tremendous confidence in both your business and your buyer, you'll want to be certain that everything will go smoothly. There is a lot of information you'll want to run by experts before you sell. You'll want to assemble a M&A Deal Team you can count on. 

A good accountant, for example, can make sure you mitigate your taxes as much as possible when you sell. A qualified attorney can help you draw up documents that keep your interests in mind. And a solid investment banker can help you market your business to qualified M&A Buyers.

Even if you have had some experience with financial or legal matters, you won't want to leave the future of your business to chance. Your future security depends on it!

7. Setting the Price Too High

You might think that your business has incredible value, but an unrealistic selling price can really turn away prospective buyers. If you aren't generating much profit, no one will be interested in the purchase.

Setting your price too low, however, can also cause it to lose value in the eyes of your buyers. Make sure you do your homework and ask for a fair price for what your buyers will be getting, such as new clients and resources. If necessary, get in touch with a valuation expert who can help you. 

8. Not Thinking Through the Transition

Prospective M&A buyers will shy away from a company if they think there's going to be a messy or disorganized transition process.

Some M&A Buyers will want to spend the last few months of the sale getting ready to take over the business. This may involve some shadowing, meetings, and transfer of documents.

It's important to let your buyers know that you care about your business enough to see that it will be left in good hands once it's sold. Letting prospective buyers know how you plan to change ownership in a calm, organized way will help make acquiring the business seem more attractive.

Selling a Business

You've worked hard, and now it's time to see your business move on to a new chapter. Selling a business is a serious decision that will require some research and forethought. With the right approach and the right M&A Buyer, you could be on your way to new adventures in no time. 

Don't stop getting smart about your business value now. For expert M&A Broker advice, contact us today. 

Hiring an M&A advisory firm can go a long way in helping you create an extensive market for your company. An M&A broker also provides you with all the information you need, including how much taxes you have to pay during the selling process.

If you are a retiring business owner looking to exit your lower middle market business in California, here are five tips to get you started:

1. Don't wait until the last minute to start planning your exit. The process of selling a lower middle market business can take a long time, so it's important to start early.

2. Have a clear idea of what you want to get out of the sale. Know your goals and what you're willing to negotiate.

3. Choose the right type of buyer. Not all buyers are created equal, so do your research and find the right one for your business.

4. Be prepared for a lot of due diligence. M&A buy-side due diligence is when buyers will want to know everything about your business, so be ready to provide documentation and answer questions.

5. Be flexible with the terms and conditions of the deal. It's important to be open to negotiation to get the best possible deal for your business.

Rogerson Business Services, also known as, California's lower middle market business broker is a sell-side M&A advisory firm that has closed hundreds of lower middle-market deals in California. We are dedicated to helping our clients maximize value and achieve their desired outcomes. 

We have a deep understanding of the Californian market and an extensive network of buyers, which allows us to get the best possible price for our clients. We also provide comprehensive support throughout the entire process, from initial valuation to post-closing integration. 

Our hands-on approach and commitment to our client's success set us apart from other firms in the industry. If you consider selling your lower middle market business, we would be honored to help you navigate the process and realize your goals.

If you have decided to value and then sell your lower middle market business or still not ready, get started here, or call toll-free  1-844-414-9600and leave a voice message with your question and get it answered within 24 hours. The deal team is spearheaded by Andrew Rogerson, Certified M&A Advisor, he will personally review and understand your pain point/s and prioritize your inquiry with Rogerson Business Services, RBS Advisors.