So, you reckon you can flog your business all by yourself? Think it’s just a matter of putting a price tag on it and waiting for the cheques to roll in? Right then. Buckle up, because what follows are two cautionary tales that’ll make your toes curl. These are real stories about real business owners who thought they could wing it when it came to selling their life’s work. Spoiler alert: it didn’t end well. But here’s the thing – their disasters could be your salvation, if you’re smart enough to learn from their cock-ups before you make them yourself.
DIY Selling Your Business Disaster: the ego
This battle-hardened business owner is chuffed. A big, swinging dick wants to buy the business. Instant validation awaits. “I knew all this hard work was going to be worth it”, he tells himself. “Wait until he sees what we’ve done!”
So, the process begins. The lid comes off the toy box, and he starts showing “Bigus Dickus” what he’s got. Here’s our numbers, here’s our projections, here’s what our property is worth.
Then the NBIO comes in and the number is below expectations. The air comes out of his lungs. The excitement is punctured by reality. Shit. What do we do now?
Okay. Do you want some help with this?
The problem? There’s no strategy here. Just a belief that everybody is going to play fair. That everybody can see the value, the same way you can.
Now, it’s hard to undo what’s already been done. We’re on the back foot, when we could have been on the front foot.
The moral of the story? Don’t let this happen to you. You are not qualified to do this stuff. Get the right help, right from the start because it’s very hard to rescue a deal that’s already, long since taken a wrong turn.
Read: Common Mistakes When Selling a Business
DIY Selling Your Business Disaster: the security blanket
This savvy lady has done very well to build a business with some wonderful clientele. She has instilled great values and the corporate culture is way better than most.
Yet, it’s hard work when you don’t have a business partner to share the load. Enter ‘the advisor’. A well-meaning man with lots of the same virtues as our business owner.
So, a curious thing happens.
At this juncture, it’s almost always a time of reflection. What am I building? Why am I building it? How long do I want to keep doing it? And if was doing it for my family, do I still need to keep pushing so hard now that they’ve grown up?
The light goes on. I don’t have to keep doing this. If I could sell my business, I could bag up a bunch of money and use it to pursue my other dreams. You know, sleeping in, swimming at the beach, travel. Life.
You know what, let’s sell it! “I’ll help”, says the well-meaning advisor. He wants to see his client – now his friend – all the way through to the end. So, along comes a buyer and they start negotiating a deal. Only they don’t know what they are doing. But, how hard can it be? I mean, it’s a bit like selling a car, isn’t it?
Discover how BridgePoint Group can help maximise your business’s value before going to market.
Yeah, naah. Not really. Well, not at all, actually.
Soon enough, they are being led a merry dance by the purchaser. He knows the game. He knows that for our savvy lady, it has now become about a deal, any deal because that’s the ticket to freedom. It’s no longer about a good deal. The heart has overtaken the head.
So, one topic at a time, he chisels away the value. Until all that’s left is a measly up-front payment and a whole bunch of promises about more to come, if the business hits certain targets. Targets over which our savvy lady has no control.
By now, you should be getting the picture. This advisor really wasn’t the right guy to turn to. Intelligent, mature, experienced, yes. But not experienced in doing deals. In this transaction, he was a mere security blanket.
The moral of the story? Don’t go into battle without the right army. You are not qualified to do this stuff. Get the right help, right from the start because it’s very hard to rescue a deal that’s already, long since taken a wrong turn.
Engaging with experienced advisers can help navigate this complex process, identify areas for improvement, and implement strategies to maximise the business’s value before going to market. If you stay on task and have the backing of a great advisory team, you can enjoy the process and be ready to start your after-business life. Contact one of our trusted business advisors if you’d like further information about selling your business.
