How Selling Your Business Could Be the Worst Mistake You Could Possibly Make
M&A transactions have increased lately. Savvy investors continue pinpointing great ventures to put their money in across industries. With billions in investment available, you might find this as the opportune time to finally sell.
Some entrepreneurs start their enterprises with an exit plan in mind. For others, the decision to sell comes along the way. Whether you want to head out for retirement or you are burnt out, there’s a great opportunity to cash in on your investment.
It is one of the toughest decisions you’ll have to make as an entrepreneur, but with careful planning, it can also be a rewarding choice. One of the biggest mistakes you can make when exiting is to sell the business yourself. Failure to hire professional M&A advisors in your exit could cost you a lot and make you lose the value of the investment.
Here are some reasons that prove selling your own company is a big mistake.
1. It is a Long Arduous Process
You have indeed built your business from scratch, and for this reason, you feel entitled to manage the sale. It is a valid point, but the question you should ask yourself is whether you have the time and energy to do it.
On average, a company sale takes months, and this can spill into years for some unique businesses. For instance, if you wish to sell a website or a SaaS business, you can expect a lot of back and forth during negotiations. Every task in the exit strategy takes time. From the business valuation, documentation, negotiations, due diligence to metrics tracking, there’s a lot of work to do.
It’s easy to let your eyes off the ball, which can affect the core business. With so much on your hands, you need a business broker to help you plan the exit. These professionals live for these deals, and they have all the time to do the job competently.
Many entrepreneurs who sell their own companies end up frustrated and in the process risk losing their investment. The last thing you want is to see your blood and toil go for a song. Working with an M&A professional saves you a lot of time and energy. It allows you to continue working on your business to make it more attractive to buyers.
2. You Don’t Know the Right Buyers
How do you narrow down on a buyer when selling your company? As an entrepreneur, you have no ready network of buyers which you can activate. In most cases, business owners start talking to family, friends and competitors when they sell their own businesses. These are not qualified buyers and they only waste your time.
A business transfer agent brings invaluable contacts into the deal. They know how to identify qualified buyers and shortlist them for negotiations. These buyers have a solid business history, verified financial capacity (capital or financing), and they understand the acquisition process. Good buyers ask the right questions and readily sign a non-disclosure agreement (NDA).
The business broker easily identifies tire kickers who sound enthusiastic about buying the business but have no capacity. These are buyers who lack the ability, means, urgency and desire to close the deal. Without expertise in selling businesses, you’ll waste a lot of time on this kind of buyers.
3. You Can’t Maintain Confidentiality
One of the key ingredients of a successful business sale is confidentiality. Unlike selling a house where you put up a ‘for sale’ sign, the case of a business is different. Whether you want to put up a traditional or online business for sale, you need to keep this information close to your chest to avoid creating uncertainty.
Letting the cat out of the bag can make your employees nervous, and customers might start walking away. The mention of a business sale sends the wrong impression even for a profitable enterprise. Your competitors can leverage such information to take customers from you while vendors and suppliers will tighten terms.
For these reasons, you need to maintain confidentiality. This is only possible when working with a business broker. These professionals create a buffer between you and the buyer. They also draft a non-disclosure agreement (NDA) which every serious buyer will sign willingly. This protects your business from any shocks and maintains its good performance.
4. You Don’t Have Prerequisite Marketing Skills
An established online business for sale advertisement might look like a good idea, but in most cases, it doesn’t work. Serious buyers expect the best deals from business transfer agents and M&A brokerage firms. These professionals look for the best deals from such professionals.
A business broker has the expertise to sell your business to the right buyers. You might know your company well, but marketing it for sale requires a new set of skills. The last thing you want is to send the impression that you’re desperate. When you try selling your own business, this is the impression you convey to buyers. There’s more scrutiny about the venture because everyone thinks it’s collapsing.
Your business representative takes over the marketing and uses different platforms to reach the target buyers. They know how to present value in your business to make it more attractive. It is these skills that guarantee a smoother exit event and most value for your investment.
5. There’s a Lot of Work in Selling a Business
Selling a business takes more than an advert and offer for purchase. Your advisor will take the time to understand your business and help draw a custom exit strategy. There’s a lot of work to do before taking the business to the market.
You will identify value drivers, business valuation, key metrics to consider in due diligence, drafting a letter of intent (LOI), preparing all documents, drafting the purchase and sale agreement, lease negotiations and a lot more work. After accepting an offer, this is where the real work starts, and you need the expertise of the M&A advisor to guide you through this.
Why You Need a Comprehensive Exit Strategy
Many entrepreneurs start the company sale process, convinced that they could handle the process. However, this doesn’t work out because in most cases, there’s no practical exit plan. Our team works with business owners to create a structured exit strategy for a smooth exit. Contact us today and let’s help you sell your company for what it’s worth.
Let’s hop on a quick call to discuss the timing and prospects of an exit based on your goals and the current state of your business. Schedule your free exit consultation today.
You're guaranteed to come away from the call with:
Clarity about your business
Knowledge of the landscape
A high-level exit plan
A rough valuation
Actionable insights
Specific next steps
Testimonials
What our clients say
In my career you get to deal with a lot of service providers. There are the below average, the average the the above average. Then there is one category that no one talks about which is the exception. We engaged Hello Exit to source acquisition targets for us. The communication, personal service, attention to details, availability, interaction with the team has been nothing short of exceptional. If ANYONE wants further in-depth conversation about the exceptional experience please reach out.
I worked with Hello Exit for the sale of a business and everything went smoothly. The team was very hands-on and provided a lot of guidance throughout every part of the process. They took the time to get to know my business well and were able to communicate our operation effectively to potential buyers. The sale was a success and I couldn’t have done it without them.
Hello Exit was great working with me to help sell my software company. They made everything clear, were patient, never over pressured me, but kept a strong sense of urgency. I would recommend Hello Exit to anyone looking to sell their business and plan on working with them again in any capacity that I can.
The team Hello Exit is simply incredible! Their expertise and support throughout the entire process of selling my company were a game changer. Their expertise and guidance throughout the entire process was invaluable. They took the time to truly understand my needs and goals, and helped me navigate every step of the way with ease. Hello Exit is exceptional, and they truly go above and beyond to ensure their clients are not only satisfied, but actually excited about their exit!! I cannot recommend Hello Exit enough! Their professionalism, knowledge, and dedication to their clients are unmatched. If you’re looking for a top-notch company to help you sell your business, look no further than Hello Exit. Thank you guys, for all that you do!
It was a pleasure working with Hello Exit and they have my most sincere recommendation. They bring a sophistication and etiquette that is very hard to find in the lower, lower middle market – outstanding preparation, excellent sell-side coaching, a rationale / unbiased disposition, and so on. In addition, they bring a powerful network to the conversation and can add value well beyond the transaction. I hope to work with Hello Exit on many more deals to come!
Hello Exit added tremendous value for our portfolio of companies. They made a complex sale process easier and significantly more efficient. We received 5 offers (two above ask) and were extremely happy with the outcome. As a serial trouble maker that has acquired 7 companies and sold 4 we will be using Hello Exit for future exits.
Hello Exit has built one of the best online business brokerages out there. As a buyer, the company has continuously provided us with acquisition targets that have been very well qualified. Every opportunity has fit directly into the criteria we’ve been looking for which has saved a ton of time on due diligence. If you want to get a jump start on your acquisition pipeline, it’s easy to recommend Hello Exit.
Hello Exit is one of the most knowledgeable business brokerages out there for tech & web businesses. We used they to buy a significant business operated by 15+ employees. Our work in diligence was substantially reduced given the strong & accurate information package he provided. All questions were proactively answered, all supporting data was there and presented in the right format, and everything was accurately represented. This saved us weeks of work! In discussions & negotiations, they played a fair role & helped resolve issues by understanding the issue from the perspective of both buyer & seller. With their knowledge and experience, they were able to make smart suggestions and helped everyone reach a common ground quickly. I would surely work with Hello Exit again. They are super!
What can I say other than Hello Exit delivered on everything they promised… and then some. At first, I didn’t believe it when they said he would sell my agency in a few months. But they were so passionate about working together, a part of me believed they would deliver. And they did. We had 3 offers in 30 days and went under contract with the highest offer. 3 months later we closed on the sale at the price they evaluated us on. During the entire process, their knowledge and experience helped immensely. Any time there was confusion or a hurdle that myself or the buyer had, the team stepped in and smoothed every over. Selling a business is one of the most invigorating yet stressful experience I’ve ever went through and I’m so grateful that I picked the right broker to help me through it. I’d use Hello Exit again in a heartbeat.
The Hello Exit team was great to work with. They helped increase our deal flow with strategic deals. If someone is looking to increase their targeted deal flow I would definitely recommend working with Hello Exit.
Hello Exit was awesome to work with on the deal. They provided great support and advice all through – from initial interest discussions, negotiations, contract closure to execution. They’re very prompt and proactive which sails the deal making through. They also provided great support and mediation help post transition on some key contract payout clauses, which is highly appreciated. I recommend Hello Exit highly to SaaS business owners and entrepreneurs.
I’ve known Dustin (Hello Exit’s Founder) for over 10 years, and actually acquired a SaaS company he founded. I’ve always found Dustin to be extremely sharp, fair and honest, reasonable to deal with, and the kind of person you would want to do business with again in the future (which is rare these days). I’m currently mentoring and incubating over 150 international startup companies, and have already talked with Dustin about bringing Hello Exit into these businesses to broker the exit once they are profitable and solidly into their momentum phase.
Hello Exit is one of the best and most trustworthy SaaS advisories and brokerages in the industry! If you run a SaaS business, and Hello Exit contacts you, you should definitely talk to them! Even if you decide not to sell, it will be a very worthwhile and fruitful conversation.
