Selling a business successfully requires adequate preparation and the ability to navigate the complex legal and financial aspects that come with the process. It is not uncommon for mistakes to happen along the way. And if they do, the repercussions can be far-reaching.
There are a number of mistakes you need to avoid when selling a business. Here are some of them:
Failing to prepare
There are a number of things you need to put in place before selling a business. Your business will benefit from some cleanup before taking it to the market for sale, just as you would if you were listing your home for sale.
Some of the areas you may want to look into include:
- Organizing your books and records
- Any pending litigation
- Unclear tax deductions
- Staffing issues
While some of these are quick fixes, others may require expert attention.
Failing to understand your business’ true value
Like any product in the market, your business will be worth as much as potential buyers are willing to pay for it. One of the mistakes you want to avoid when valuating your business is solely relying on the EBITDA formula. Unfortunately, this comes with its share of shortcomings. It is important that you paint a compelling picture of your business’ future to potential buyers. And this can only happen when you have a sound understanding of your business’ value.
Your business might mean the world to you. However, this does not mean that you should stretch the truth to potential buyers. The motivation to get as much as possible from the sale is never a good justification for dishonesty when selling your business. Besides the ethical questions that may arise, lying about aspects of your business like income, assets and liabilities can result in a legal problem.
Every experience in selling a business is unique. Find out how you can avoid costly pitfalls while selling your business in Arizona.