Top 10 Reasons Why Not to Sell Your Business On Your Own

CEOs and business owners are a motivated, driven, self-sufficient group. You have built your business by doing things your way and learning how to save money along the way. You’ve also developed a lot of self-confidence and feel that you can do almost anything.

But when it comes to selling a business that you’ve worked so long and hard to build, it’s not only prudent, but very cost-effective to hire a professional mergers and acquisitions (M&A) advisor. Invest in a professional who has the expertise and experience to get the sale done and get it done at the optimal price and terms. There is too much at stake to risk making it a sale by owner project.

Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.

Here are 10 reasons why you shouldn’t attempt to do it yourself:

10. Maintaining Confidentiality.
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can’t. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.

9. You May Not be Dealing with the Optimal Buyers.
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.

8. It Involves an Extensive Amount of Time Better Spent Running Your Business.
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you’re trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?

7. You Lack the Expertise and Experience in Selling a Business.
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.

You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.

6. Representing and Selling Yourself Typically Backfires.
If you don’t have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor’s job to pursue buyers, doing so doesn’t send the same message.

5. Your Sale Process and Marketing Doesn’t Stack Up to an M&A Advisor.
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.

4. An M&A Advisor Acts as a Buffer.
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.

3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer.
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.

2. You Need a Trusted Advisor.
Your attorney and accountant may be very skilled and knowledgeable, but most don’t commit the needed time, don’t focus on a goal of securing multiple offers, and don’t have the knowledge about the marketplace and selling businesses that is needed to be successful.

Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.

1. Selling Your Business Faster For the Best Price.
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don’t get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.

Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.

An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.

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