10 Reasons Businesses (sometimes) Don't Sell

1 Price Expectations;

Vendors with unrealistic price expectations seriously impede their ability to sell. Concentrate first on preparation to help maximise the value of a business. Then get in front of the right buyers. Then listen with an open mind to all offers and start to gauge the 'market value' of your business.

2 Lack of Seller Flexibility;

Cashflow lends are very rare so if you're lucky you'll find a cash rich buyer but if not you may have to be flexible and creative with how to bridge price and/or funding gaps. Do not hold on tightly to cash out deals - they rarely happen. Understand that deferred payments and earn outs are highly likely routes to achieving a deal.

3 Skeletons in the Cupboard;

Preparation is key so get your ducks in a row before taking your business to the market and make sure you've addressed and removed any skeletons in the cupboard. Get rid of any outstanding litigation, resolve any employee disputes and provide buyers with a clean, easy to understand sale proposition.

4 Stakeholder Conflict;

I've seen deals fracture due to the late emergence of a discontented key stakeholder. Vendors need to make sure everyone is on board at the beginning of the process.

5 Vulnerability of Earnings;

A key problem with selling small businesses is the vulnerability of earnings. Buyers measure risk and if the revenue is inconsistent, owner dependent, non-contractual or highly vulnerable to competition or micro factors then the risk factors escalate. You may not be able to do much about it but be aware that buying a small business can be risky for a buyer and you may need to share some of the risk.

6 Lack of Process Momentum;

Time kills deals. The greater the drift the more chance a deal will fracture. Keep on top of all advisors to ensure they are all driving forward in the same direction and keep the pressure on prevaricating buyers. Lots of people like to talk about buying and investing but many fail to deliver.

7 Owner Dependency;

The value of a business increases as the vendor shifts a greater % of goodwill from personal to business. Smaller businesses are often too owner dependent so you need to train up the management, systemise processes and give yourself the luxury of a long holiday to prove the business is sustainable without you.

8 Quality of Financial Information;

Vendors should always think about selling close to or soon after year end so that financial information is contemporary and relevant for a buyer. Too many businesses (& advisors) go to market with poor quality financial information which only adds to a buyers uncertainty. Make sure your accounts are up to date and available.

9 Wrong Advisors;

Choosing the wrong advisor can have a very negative impact on the entire sale process and the vendors value. Receiving honest advice at the beginning will make a huge difference to what can be achieved at the end and beware - there are a lot of cowboys about in the business sales market.

10 Chemistry;

Deals are all about people and sometimes the buyer and seller just don’t get on. Try to see through the emotional side of a negotiation and focus on that exit.