Selling your business will be one of the most critical decisions you will ever make. As seen on the list below there are plenty of mistakes to avoid when selling your business. Whatever you do, don’t make these big regrettable blunders.
Whether you’ve already received an offer for your company, or you are just staying ahead of the curve, these are the things you should take into consideration and be discussing with your M&A advisor before signing anything.
1. Not Planning Ahead
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Even if you say you will never sell, it will pay big dividends to learn the process of exiting your startup. Most end up exiting at some point. If things go well, it may be a lot sooner than you think.
There’s a lot that goes into selling a company. The savvy are investing in educating themselves, in developing strategy, putting the right moves in place, and networking and building relationships years, if a not least months in advance. You are not just going to stick a for sale sign in your window and hope to find a buyer or get a good price for it.
2. Missing Opportunities
As much as you’d like to pretend you can just brush it off, there’s going to be nothing quite like the anguish of knowing you turned down a really big offer and missed the boat when selling your business. Can you imagine turning down $1 billion, or even $150 million offer, and then seeing your business value tank hard. It won’t feel good.
There are great examples here such as the time when Yahoo turned down a $45 billion offer and ended up selling to Verizon for a mere $4.8 billion.
A big part of this is also going to be having your board and investors prepped and ready to act when the opportunity comes. The board is without a doubt one of the best resources and support in order to deal with making the potential mistakes to avoid when selling your business.
3. Just Giving Up & Selling Out
Why are you selling your business? Are you just folding? Is that really what you want to do, yet?
Selling may be the best move. Markets change and it is sad to miss a peak. Yet, selling too fast may be selling yourself, business, team, and idea short. This without a doubt one of the most common mistakes to avoid when selling your business.
Some businesses just don’t work out. They just don’t have the juice and right components to make it. Others can with a smart pivot or two.
Every business owner has hard days. So, do employees. We all suffer most of the same challenges. Virtually the only difference in those who succeed and don’t is quitting. You don’t fail unless you quit.
It’s worth asking whether you should push a little harder, or if it is really time to fold. Or maybe raising another round of funding is what will see you through.
4. Locked Into Long Resting & Vesting Periods
If you haven’t done your homework on selling a company yet, one of the terms of your sale may be staying on for several years.
These earnouts can help you get more money for your business. However, unless you are really going to an inspiring company where you are learning and love the culture and have decision making power, chances are you may find it a serious grind. Not the fun kind either.
Be sure you can stick it out before signing on. Remember that everything is negotiable. Some buyers and bankers may tell you otherwise and say “it’s just standard.” Though the right M&A advisor can help you negotiate the terms that matter to you most.
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