10 mistakes that kill business sales (and how to avoid them)
Getting an offer is not the hard part. Getting to closing is. Most deals that die do not die over one big thing. They die from problems that were sitting there the whole time and surfaced at the worst moment. These are the ones we see most.
1. Pricing on hope
An asking price based on what you need, not what the business earns, keeps serious buyers away and attracts the wrong ones. Even if you get an offer, a lender's valuation can knock the price down late in the process. Price from recast earnings and real comps.
2. Books that do not match the tax returns
Buyers and lenders trust tax returns. If your P&L shows far more profit than your returns, expect them to use the lower number. Get your statements reconciled before you list.
3. Add-backs you cannot prove
Every personal expense or one-time cost you add back needs a receipt and an explanation. Undocumented add-backs get thrown out, and so does the value attached to them.
4. The business is you
If you hold every customer relationship, do every estimate and carry the license, a buyer is buying a job with a lot of risk. Start delegating early and show the business can run without you. More on this in Owner-dependent businesses sell for far less.
5. Letting performance slip during the sale
Owners distracted by the sale take their eye off sales and margins. A buyer watching monthly numbers sees the dip and re-trades the price. Let your broker run the process so you can run the company.
6. A lease problem nobody checked
Too little time left, no renewal option, or a landlord who will not approve an assignment can stop a deal cold, especially when a lender needs the lease to cover the loan term. Read your lease now and talk to your landlord before you list.
7. Hiding problems
A pending lawsuit, a big customer about to leave, a tax notice. It will come out in diligence, and when it does the buyer will wonder what else you did not mention. Disclose early and frame it with a plan.
8. A leak
Employees who hear rumors leave. Customers get nervous. Competitors pounce. Blind listings, NDAs and buyer screening exist for a reason. See how confidentiality works.
9. Chasing the highest number instead of the best deal
An offer with a big headline price, little cash at closing and a long unsecured seller note can be worth less than a lower offer that closes clean. Look at cash at close, financing certainty, seller note terms, earnouts and your transition obligations.
10. Bringing in your advisors too late
If your attorney and CPA see the deal for the first time a week before closing, expect surprises on taxes, allocation and contract terms. Bring them in when you sign a letter of intent, if not before.
The pattern
Almost every one of these is avoidable with time and preparation. The three-year preparation plan and ready-to-list checklist covers them in order. If you are a year or more out, an exit plan fixes most of them before a buyer ever sees them.