There are many obstacles a business owner encounters when selling his/her business to a third party. As a general rule, most businesses are not ready for immediate marketing and sale when the business owner decides s/he is ready to sell.
Many obstacles and deal breakers can be eliminated by engaging in exit planning or the pre-sale planning process before putting the business on the market.
Obstacle #1: Business owner has unrealistic expectations
Before putting the business on the market for sale, it is imperative that the business owner understand the likely value range and terms for a sale. If the business owner's financial needs exceed the maximum value of the business, pre-sale planning can be used to maximize value prior to going to market.
Obstacle #2: Business owner's advisors are not on the same page
There are many advisors that must work cooperatively to effect the business owners objectives of a successful third-party sale. It is best if the advisors all meet early in the process to make sure the entire team is using the same playbook. The team will generally consist of the pre-sale planner, a CPA, estate planning attorney, transaction attorney, transaction intermediary (investment banker or business broker), insurance professional, financial advisor, business consultant and others depending on the specific business owner's situation.
Obstacle #3: Tax Consequences have not been reviewed and addressed
Sometimes business owners do not want to get their CPA's involved in the process until they have an offer in-hand. This has derailed many potential sales because there was no pre-sale tax planning to minimize or defer taxes. Just as it is important to understand how much you can get for the business, it is similarly important to know how much you will be able to keep.
Obstacle #4: Mental Disconnection from the Business
Motivated buyers respond more favorably to business owners that present an efficient and well organized business. Even when a business owner is somewhat burned-out, it is important to emphasize the positive aspects of the business and to be realistic about the negative features. A clean and well-maintained facility tends to be indicative of a well-managed operation. The business owner has to mentally stay in the business until after the sale has been completed.