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Common Mistakes to Avoid When Selling Your Business

  • Thomas Oppong
  • Mar 25, 2016
  • 2 minute read

Business people need to come across many difficult situations in order to expand or save their business. Sometimes small companies club their business activities with large organizations and sometimes large organizations acquire small companies by force. These merging and acquisitions of companies with various strengths happen due to several reasons. And depending on their purposes the activities in this line vary.

Among the leading organizations, John Binkley Generational Equity is an intermediary firm located in Dallas successfully engaged in mergers, divestitures and acquisitions of companies. Under the chairmanship of Dr. John Binkley the company has set to release the equity and generational wealth locked in every business.

Common behaviour while selling a business

Quite often business people, however smart they are, are not that smart when they sell their company. Most of them do not have an idea of what their company is worth and how much to demand. In the urgent to move in life to the next phase, they simply push this phase and complete it.

From a tiny business owner to middle level market owner, they are prone to do some common mistakes when they sell off their business. If only they know it and stop from doing it, they can very well wind up the business in a more prospective manner.

Unaware of true potentiality of business

Many entrepreneurs do not know how much their business at the present stage is worth and how much they need to move to their next level of planning. This happens because they do not have a proper exit plan. All the businesses are planned from day one.

They have complete planning for every aspect of their business and for every stage except the exit plan. However, according to John Binkley Generational Equity, all business must have an exit plan the moment they prepare to open their doors. If this is not done, the business owner is forced to sell his company when he has to and not when he wants to.

When they are prepared to sell off, the financial statements must be made accordingly or recasting and they must prepare their latest five year earnings and revenue.

Inadequate documentation

It is a wonder that many people try to close up their business without proper documentation. Such business owners will definitely lose their potential buyers. While selling a business, at least three documents have to be made ready with proper care.

They are Offering Memorandum (OM), profile letter and the confidentiality agreement (CA).  These documents must be prepared with the utmost care and attorney consultation.

Selling to wrong buyer, structuring the deal as non-favouring and finally closing the deal at the wrong time – all these are common mistakes by entrepreneurs which result in less profitable sales deal.

Professionals like Generational Equity LLC guide people to sell their business from assessing the value of the business, preparing the right documents, marketing the deal, negotiating with the buyers and closing up the deal in the most profitable manner.

Thomas Oppong

Founder at Alltopstartups and author of Working in The Gig Economy. His work has been featured at Forbes, Business Insider, Entrepreneur, and Inc. Magazine.

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