3 Things You Should Never Do Before Selling Your Business
When it comes to selling your business, there is a plethora of information out there pertaining to how to sell a business. You can learn the mechanics of a good sale, the ins and outs of financing and contracts and even what to do after the sale. When it comes to the how-to’s of selling you are set.
After 25 years of helping business owners with their exit strategies, I can tell you that there are three little things that most owners forget to think about prior to putting their business up for sale.
1. Don’t Be a Jerk.
It’s human nature that in any negotiation, one party will be eager and the other will be reluctant. Now that might not be true every time, but it’s probably true 80 percent of the time. So, assume that your negotiation will be like most others: It will have an eager party and a reluctant one.
My suggestion to business owners looking to sell. Don’t be a jerk. Play the role of the reluctant party and force the buyer to get eager.
Reluctant parties qualify their language every step of the way. They say things like, “I don’t know if we could do X.” Or “Would this work for you if we could do it?” They also ask a lot of questions and pose a lot of challenges. They never say, “Yeah! Let’s do it!” They don’t show excitement. Everything is qualified and subdued.
Not only will this strategy make the buyer more excited to “win” the sale, but it will also prove helpful when it comes time to negotiate after sale terms like training and consulting contracts.
2. Don’t Work With Jerks.
Do you have a particular vendor that is just a pain to work with? Maybe they always pay late or have trouble meeting deadlines? Whatever the scenario, having non-compliant vendors will come back to hurt you during a business sale. The last thing that the new owner wants to deal with is production issues right out the gate, so take the time before listing to get your vendors in order or seek out alternative options.
3. Don’t Hire Jerks.
In most business acquisitions, your staff, or at least your key team members will likely transfer over to the new owner. So it is critical that you get your hiring (and firing) issues squared up prior to listing your business. Focus on your company culture and hiring competent team members.
When it does come time to sell, be careful. During the due diligence process you are going to be asked a lot of questions. Your potential buyer will ask for financial reports, marketing collateral, key account information, etc. All of which your team has an intimate understanding of. So it seems reasonable to reach out to your key team members to get this information.
Don’t do it.That’s how you get jerks.
Tipping off your employees too early can cause a mass exodus that can scare off your buyer really quickly. At a minimum, telling your team will cause fear and uncertainty which will lead to drama, and you don’t need that. You will tell the whole company after the deal is closed (and not a minute sooner).