Selling a business is a skill acquired through experience, education, or both. To sell your business, you need to learn as much about the process as you can. It’s also critical to surround yourself with a team of M&A experts with industry knowledge who can help guide the process. They can dispel popular myths, and guide you to make sound decisions. The following five myths are among the most pervasive—and harmful—myths about selling a business. Working with the right team can help you understand how these myths damage your sales potential.
It’s Hard to Get a Loan, and That Makes Selling More Difficult
While the nature of business financing has changed, lenders are still eager to extend loans to qualified buyers. The key to securing a loan is preparation, and there’s much that a seller can do to support the process. The right buyer can and should be able to get a loan, so financing issues should be a red flag.
It’s the Job of the Buyer to Deal With Financing Issues
While financing decisions ultimately hinge on the creditworthiness of the buyer, there’s a lot that sellers can do to ensure approval of the loan. Get the business pre-approved for financing, since this lends credibility to the business and can even make the financing process easier. It’s also helpful to do some degree of financing yourself, since many buyers now expect some form of seller financing. This shows that you believe in the business and believe the new owner will be a good fit.
Confidentiality Doesn’t Matter; People Need to Know the Business is for Sale
In a traditional sales process, marketing is everything. But when you sell a business, protecting confidentiality protects the health of the business. You don’t want to scare customers and staff about an uncertain future. New ownership makes people anxious. Keeping the sale confidential allows you to control the narrative and dictate the timing of the sale announcement.
Selling the Business Means Selling Everything, Including Business Real Estate
This is rarely true. In fact, many sellers sell only portions of the business, or sell the business but maintain their ownership of the property. This is a way to continue collecting a paycheck. The drawback, of course is that you then become a landlord, and your revenue is still dependent on the business. So you’ll need to consult with your team to assess what the right role for you is following the sale of the company.
It’s Good to Sell When the Business Stagnates or Slows Down
You might give the most thought to selling your business when it’s struggling, but the truth is that the best time to sell is when your business is thriving. It’s tough to walk away from a business that’s gaining momentum. But savvy buyers want to see that the company has the capacity for growth. It’s also important to sell your business at a time when it’s most attractive, not when you have to explain stagnating sales.
