Brian Slipka, the CEO of Sunbelt Business Advisors and the True North Family of Companies, is well-versed in the challenges of selling a business. He highlights the importance of being prepared and knowing what pitfalls to avoid when entering the business transition process. One common scenario in the industry is deals falling through multiple times before being finalized, making it crucial for sellers to understand the potential deal-killers that could derail the sale.
One major factor that can kill a deal is negative aspects uncovered during the due diligence process. Buyers want financial security and a promising future as the new owner, so any discrepancies in profit or revenue can lead to the termination of the deal. Another deal-killer to watch out for is deal fatigue, which occurs when negotiations drag on for too long, causing both parties to become disinterested and stressed. Clear communication, realistic timelines, and proactive engagement with the buyer can help prevent deal fatigue.
Funding issues are another common deal-killer, as buyers must have their finances in order before proceeding with the purchase. Business owners should inquire about the buyer’s financial situation, including their capital stack and debt plans, to ensure they are capable of closing the deal. Additionally, third-party barriers such as landlords, suppliers, customers, and governmental authorities can pose obstacles to the sale if not addressed properly.
One critical aspect that sellers often overlook is defining how much net working capital is included in the sale. Failing to clarify this can lead to misunderstandings and ultimately kill the deal. By understanding the components of net working capital and being transparent about what is included in the sale, sellers can avoid potential complications during the negotiation process. Overall, being prepared and aware of these deal-killers can significantly improve the chances of successfully selling a business and finding the right buyer.
It is essential for both buyers and sellers to have peace of mind during the demanding process of selling a business. By avoiding common deal-killers and seeking professional advice, sellers can navigate the transition with confidence and increase the likelihood of a successful sale. The information provided in this article is not investment, tax, or financial advice, and individuals should consult with a licensed professional for personalized guidance. The Forbes Finance Council, an exclusive organization for executives in accounting, financial planning, and wealth management, emphasizes the importance of staying informed and seeking expert assistance in navigating complex financial transactions.
