Selling a Business Needs Patience!

The process of selling a small or middle market business is generally a long one. It starts by listing the business with a business broker and it ends by closing the transaction and it goes through a multitude of small steps. It only takes one misstep for the process to need a complete reboot. A savvy seller with the right professional counseling could avoid some missteps but generally not all of them. As a result, reboots are frequent and time is wasted before a seller completes a deal.

When interviewing potential business sellers before listing their businesses for sale, I spend a lot of time and attention understanding their real motivation for selling their companies. A seller with fuzzy reasons will rarely have the patience to go through the whole process and complete a deal. Having a good reason for selling ,while necessary, is certainly not enough. The other key ingredient is the persistence. I occasionally run into sellers who get discouraged after the first unsuccessful attempt and abandon the whole idea of selling.

The rapid swings in sellers’ emotional state is one of the reasons reducing their persistence when trying to sell. Sellers generally identify with their businesses and tend to confuse buyers’ objections about the business with personal attacks against them that they have hard time handling. Sellers feel such a pain and unfairness that the whole idea of selling becomes insurmountable. A good business broker understands the emotional states of business sellers and warns them in advance about their emotions before listing the business. A prepared seller recognizes his/her emotional swings when they happen and deals with them accordingly.

I generally advise sellers not to rely too much on potential buyers’ preliminary excitement about the business. While the initial buyers’ excitement can be a real engine to push toward a deal it also could be an unrealistic dream that will never happen. In order to increase the likelihood of having a deal, the broker and/or seller should deal with as many buyers as possible and not rely on promises.

After a serious buyer makes an acceptable offer, the seller and broker need to make a tough decision. Is this buyer worth focusing on? Should we work with him/her on an exclusive basis? There is generally no sure answer to these questions. A decision needs to be made quickly. If the decision is yes, then the seller should put all his/her efforts to help the buyer with the due diligence.

It is frequent that the chosen buyer ends-up not being the right one. In this case the seller and broker must move-on and start the process again with no hard feelings!