Common Mistakes Owners Make When Selling Businesses

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A graduate of the Kelley School of Business at Indiana University, Matthew Brunstrum has been working in the finance field for more than 5 years. Matthew Brunstrum serves as a mergers and acquisitions advisor at Sun Acquisitions in Chicago, Illinois, and is responsible for providing a range of M&A services to clients that help them with buying and selling lower middle market businesses.

While the economic climate, credit market, and other external factors do affect whether a business sale succeeds, there are also several internal behaviors that business owners must avoid to ensure transactions go well. Some of the sales mistakes owners should avoid include:

Misunderstanding the Value of a Company
Most business owners have a number in mind when they plan on selling their companies. Unfortunately, this number is not always representative of the company’s true value. Before setting a selling price, owners must create a range of realistic values for their businesses.

Unwilling to Hire Professionals
When it comes to running their businesses, owners are likely the experts. But this experience doesn’t translate to selling their companies. Owners must be willing to hire the professionals they need during the process, such as a business broker, lawyer, or M&A consultant.

Wasting Time on Bad Buyers
Some business owners think that the best buyers for their companies are customers, suppliers, competitors, or friends. However, these individuals aren’t always financially qualified to take on the businesses, or even interested in becoming owners. Instead of wasting their time pushing sales on uninterested or poorly matched parties, owners should focus on serious buyers only.

Breaching Confidentiality
Openly selling a company can be detrimental to its operations by decreasing sales or damaging customer relationships. To avoid this, owners must make a conscious effort to keeping the sale of their companies quiet until the deals are completed.

Packing Light for Travel

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A mergers and acquisitions advisor at Sun Acquisitions in Illinois, Matthew Brunstrum leverages more than 5 years of financial experience to help clients buy and sell various companies. Outside of work, Matthew Brunstrum enjoys traveling.

Whether you are planning a trip for several days or several weeks, it pays to pack light. Limiting yourself to just a carry-on or backpack not only saves you money on increasing baggage costs for airlines, it also makes moving around different countries easier.

To successfully pack an entire wardrobe in less space, focus on layering. Don’t waste the precious space you have with items designed for a single climate. Instead, choose items that are suitable for any weather when they are layered with different items. If you need any weather-specific items such as gloves, purchase them locally and pass them on afterwards so you aren’t carting them around.

Usually, you only need about a week’s worth of clothes. For longer trips, wash these items in your hotel room, or make use of the hotel’s laundry facilities. While this may increase the cost of your trip slightly, doing laundry saves you valuable packing space for longer trips. It also keeps your clothes fresh despite being packed away in your luggage much of the time.

In addition to clothes, you must also consider footwear for your trip. Shoes take up most of the space you have in your luggage, so try to bring enough options for everything without overdoing it. The key is choosing footwear that is comfortable and small. Ballet flats, for instance, can easily fit in a bag, as can flip flops. And for sightseeing, you may prefer a set of comfortable sneakers. Since sneakers are bulkier, plan on wearing them instead of packing them.

Buying a Company with Existing Employees

Matthew Brunstrum is an M&A advisor for Sun Acquisitions in Chicago. In this position, Matthew Brunstrum handles diverse listings, including offers that include real estate and existing employees. 

Some buyers may prefer that a company comes with essential employees already in place. However, this brings extra considerations to the sales process. Here are a few strategies for acquiring a company with existing employees:

– Meet with key employees. Essential employees usually have the knowledge or hold a credential that is required to run the company. Buyers must interview these employees as part of their due diligence to ensure that the company is viable and compliant with regulations. This usually takes place late in the negotiation process.

– Consider an agreement. Buyers have the option to propose contracts that obligate employees to work for the new company. Some experts advise buyers to empirically analyze the contributions of key employees before they offer these agreements.

– Implement a retention program. A transition can be a difficult time for existing employees. If not managed properly, the change can trigger an exodus of skilled workers. Buyers can create a retention program with incentives, such as money and benefits, that encourage employees to stick with the new company.