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The 4 critical succes factors when selling a business
Lack of an active selling process is one of the main reasons for businesses not being sold. If you observe following 4 critical factors, your chances for a successful sale improve significantly. To find out how successfully sell your company, arrange your free review today, or call us on +49 (0)221 5694-457.
1. Avoid passivity at all cost
2. Motives are more important than valuations
3. Insist on more than one possible buyer
4. Future potential seals the deal
1. Avoid passivity at all cost
No matter who your consultant is, insist on active marketing! Only then you find strategic and financially strong buyers. Many consultants will tell you that's exactly what they do. In reality they often just have frequent buyers on file which they always contact. Passivity (i.e. paper and internet ads) only attract buyers not willing to pay much. In many cases buying offers are far lower than expected.
2. Motives are more important than valuations
Never start your selling process with a business valuation. This is by far the most expensive mistake of traditional selling methods. A business valuation can be very expensive and only offers little added value. The truth is, each buyer has their own methods of valuation and heavily depends from buying motives. Our experience shows that the difference between the lowest and the highest offer is 2.5. This is driven by motives, not by valuations.
3. Insist on having a choice of buyers
This is the most important factor when selling a business. Having a choice of potential buyers impacts the selling price, the speed of transaction and terms of sale. Another advantage for you: should your first choice of buyer drop out, you still have other buyers waiting. A choice of buyers you only achieve with an active selling process.
4. Future potential seals the deal
The truth is: no one buys a company bases on its history, only future potential decides. Are their any synergies or new markets and products to explore? Existing future potential creates interest and almost always increases selling prices. Short term declines in turnover and profit in the past only have little effect, as long as future potential exists.
If you plan to sell your business or simply want to find out more, arrange your free review today, or call us on +49 (0)221 5694-457.
