Jumping the Gun

You’ve planned to sell your business for some time. You’re tired and ready to retire. You’ve got a buyer knocking at your door. You’ve agreed to a price with the buyer and he seems like a good guy. So, now you’ve got the urge to go to the beach or play golf or anything other than dealing with your business. Big mistake!

Over the years of selling businesses, one of the major goofs we have witnessed is a business owner that changes their normal operations when they think a deal is done. Some of the changes have been; discontinuing marketing and advertising projects, cutting inventory levels, taking a long vacation, and they may even stop paying the bills. Guess what? Those deals died quickly!

It is critical to continue normal operations through the sale process. Buyers will continue their investigation of the business up to the day of closing. If a buyer or a bank realizes that revenues are off, or that there are other changes taking place that may negatively impact the business, they may get nervous and pull out of the deal. That’s not only bad because there’s no deal and no big payoff, but now the seller has a business that may need to be repaired and rejuvenated.

An alternative to keep the deal together is to renegotiate the price or to offer seller financing (if the buyer is still interested). Or worse, if the buyer didn’t catch on that you were making changes during the sale that adversely impacted the business; their attorney may have something to say about it.

To get competent advice when selling your business, talk to your Apex Business Advisor.