Selling Your Business Is Challenging. It happened just the other day. A seller called and asked for help. We stop by for a visit and this is what we hear: “I made a $50,000 mistake for help in selling my business and it never sold.” The seller is not happy. So we ask a few questions and the story comes out in full. This potential seller contacted an entity, (we’re not going to name names here for obvious reasons,) the entity was in the seller’s industry and claimed to know where he could find buyers and promised him that they could point him toward them. But, he must know the value of his business before this could occur. He did not know who to call, so he called his attorney and his CPA. Neither of them had experience in valuing a business but (of course,) they promised to help. They both went to work, billing by the hour all the way through the process. In the end, the seller had a pile of documents that looked official and complete with something of a value on his business. By the time he got the value on the business, there was no longer any interest on the part of that promised buyer. End of story. Now what? Selling your business does not have to be challenging.
Needless to say the seller was upset because he felt that spending the $50K got him nowhere closer to a real sale of the business. He had every right to be discouraged. But, we shouldn’t blame his attorney or his CPA. They were just doing their job. No, he had only to blame himself. It was a mistake—a costly one!
So, where did he go wrong? What could he have done differently? Had he called someone with experience in selling businesses right from the start, he would have been better off all around. The main reason is experience. Had he called a qualified and trustworthy business broker, he would not have paid anything until the closing. Brokers work on commission. So if there are no results, there is no pay. Second, the attorney and CPA may have been involved at different steps along the way, but not to the tune of $50,000, and all of their fees would have been included in the Broker’s commission.
I could go on with other reasons, but there’s no need. I’m sure you get it by now. Selling your business should include professionals in the process who have experience selling your business. Let’s use real estate as an example. If you have a property for sale, you could probably sell it yourself without help. If it is a commercial property, you might be able to rely on a residential realtor. But, a realtor with experience selling commercial properties would be a better choice. The same applies when selling a business. If you are selling, it’s best to rely on someone with experience selling businesses and preferably someone with experience selling businesses like yours. That simple advice could potentially save you $50,000.