Preparing your business for a successful future can go hand in hand with preparing your business for a successful sale. Even if you don’t think you will ever sell your business, “deal killers” can harm your business’ value and future if they go unaddressed.
Taking precautions against things that can go wrong can not only set your business up for future success but also set up you, your family, and your personal interests up for similar success. Eight common deal killers can prevent you and your company from achieving the success you want.
Deal Killer #1: Assuming that you can sell your business today and achieve financial independence.
Some business owners believe that they can live on less money after they sell. Address this through pre-sale planning by objectively determining how much money you need to achieve financial independence.
Deal Killer #2: Assuming the market values your company as highly as you do.
Because your business is likely a part of your identity, you may end up overvaluing it. Address this by getting an objective estimate of your company’s value from an investment banker or business broker.
Deal Killer #3: Focusing solely on getting the most money possible for your business
Focusing on only getting the absolute amount of money for your business can clash with value-based goals. Assemble a deal team before you’re ready to sell to prevent you from taking your company to market before you and your company are ready.
Deal Killer #4: Failing to keep key employees on board and engaged.
Without a strong management team, buyers may question whether your company has value outside of your presence. Keep key employees on board and engaged by using quality incentive plans such as non-qualified deferred compensation plans, stock bonus plans, or stay-bonus plans.
Deal Killer #5: Negotiating a deal by yourself.
Serious buyers will come to the table with teams to help them pay the least and get the most for your company. A deal team can help you strengthen your business to achieve your selling goals.
Deal Killer #6: Failing to hire a deal team.
Hiring and collaborating with a deal team can not only ensure you are not overwhelmed trying to negotiate a deal but can help you find and fix flaws before buyers see them and prevent buyers from retrading.
Deal Killer #7: Neglecting to commit to pre-sale due diligence.
Pre-sale due diligence can be both financially and emotionally costly. However, identifying your company’s weaknesses before a buyer can be beneficial to the selling process. Pre-sale due diligence must be clear-eyed and objective so that you don’t ignore significant business flaws. Your deal team can help you follow through on due diligence so that you can plan for a successful future on your terms.
Deal Killer #8: Not planning for a future without your business.
Once you sell your business, it’s no longer yours. Seller’s remorse is common, but by talking to your advisors, family, and other owners, you can share your ideas about what success looks like, ask for their thoughts, and receive help in finding a purpose outside of owning a business.
At Aberdeen Advisors, we strive to help business owners identify and prioritize their objectives with respect to their business, employees, and family. Reach out to the Aberdeen Team to talk more about your goals for the future and get insights into how you might achieve those goals.