0333 3440 778 - info@hhcbs.co.uk
 

The most common reasons business sales fail to complete

If you are preparing to sell your business it is prudent to understand why so many business sales fail to reach completion in order to avoid making the same mistakes.

Unrealistic Value Expectations

Unrealistic value expectations can often be the cause of a deal failing to complete. It is important to understand what your business is really worth when considering the timing and possibility of an exit.

Sometimes these value expectations do not originate with the business owners but can be the result of sales people and transfer agents attempting to secure as many signups as possible.

If you have had a valuation that seems too good to be true seek a second opinion here.

A business owner is unable to manage both their business and a sale simultaneously

Even if your management team is capable of running the business day to day overseeing your team whilst liaising with potential buyers and their advisors can be overwhelming without professional representation and guidance.

In the worse case scenario the business owner is fatigued by the process, the buyers frustrated by the time it takes to respond to information requests and worst of all the financial performance of the business starts to slide as the owner has taken their eye off the ball.

It is an M&A advisor's responsibility is to take the strain off the business owner, to act as the first point of contact and to manage the entire deal process on their behalf.

Issues discovered during the due diligence process

There are two aspects to consider here, the first is proper disclosure, any issues or aspects of the business that could jeopardise the deal should be disclosed before the buyer enters the due diligence process. A nasty shock could send the buyer running for the hills, however if properly disclosed and explained in an upfront manner these issues can usually be managed and overcome.

The second issue to consider is that an unexpected problem has been discovered during due diligence and renegotiation of the terms is required. This is when the services of your M&A advisor will be crucial to keep the deal moving forwards and finding a compromise both buyer and seller are happy to accept.

Personality clash between the buyer and seller

Although this might seem unlikely it is actually one of the most common reasons a deal does not reach completion.

The buyer may like the business and an acquisition might make sense for all the right reasons however the process can often stall or fail completely due to a clash of personalities and egos. This is exacerbated when a seller has unrealistic value expectations. What may be a reasonable offer can seem like a slap in the face if the business has been seriously over-valued.

An experienced M&A advisor will manage an owners expectations and help them see their company ‘warts and all’ from a buyers perspective before beginning the process. This in turn helps the owner emotionally disconnect from the negotiation process.

Sometimes even this is not enough and it is crucial that a raft of potential buyers and offers are sourced in order to find the right match not just of business activities and financials but personalities and what is often referred to as ‘corporate culture’.

 

Request a confidential call back

Name:

Email:

Phone:

How to value a business

business-valuation.jpg
 
Copyright © 2015 All Rights Reserved. | sitemap | privacy policy | Find us on Google+