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Avoid these 5 pitfalls when selling your business

Are you often contacted by companies that want to buy your business? And do you think you might be able to manage a sale yourself without a business broker? Then think again. There are several things that can go wrong in this process and you risk cheating yourself and any co-owners.

Business Broker been involved in more than 200 ownership transfers in Danish companies. We are also frequently involved in international transactions.

That's why we know the pitfalls that can occur when selling your business. And we know how to avoid them.

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Here are the main pitfalls you risk falling into if you want to manage the sales process yourself:

Pitfall 1:
You're valuing your business wrong

Do you know what a business like yours is worth? Do you know the market? It's difficult to gain insight because it's rare for companies' sales prices to be made public. Plus, you're emotionally attached to your business and find it difficult to assess it objectively.

Maybe you value your business too highly. Then there are no buyers. Or you value it too low and you get less out of the deal than you could. Also, the value of your business will differ from buyer to buyer, as they have different synergies and motivations for an acquisition.

A professional business broker knows the market and can find the optimal buyer candidate and put the right value on your business. Read about the most important factors in valuation.

Pitfall 2:
You get burdened with extra tasks - and can lose focus on daily operations

Finding the right buyer and negotiating the terms takes time. Confidentiality is also important, and even if you have other advisors by your side, they may not have relevant and practical experience in selling businesses.

Doing it yourself takes the focus away from day-to-day operations, which can compromise the value of your business. In addition, the sales process can grind to a halt because you're busy with day-to-day tasks.

A professional business broker leads a structured sales process so that you have an overview of the process while focusing on running your business.

Pitfall 3:
You're negotiating with the wrong buyer

If you're negotiating with a buyer who has approached you, you don't know who else might be interested. There's much more than finances at stake. It's about trust and the future of the business. The vast majority of sellers dream that the company can grow and that the employees can continue their activities after a sale.

A professional business broker has a large network of both national and international companies and investors who could potentially be a much better match than the buyer who approaches them.

"A good business broker ensures that the sales process is always moving forward" - Klaus Termansen

Pitfall 4:
You're negotiating the wrong deal

Even with a lawyer by your side, you may find that the SPA does not reflect the market. The lawyer has the legal knowledge, but who ensures the commercial basis of the SPA? And thus the seller's financial opportunities?

A professional business broker is an experienced negotiator who knows the market and can challenge the buyer and buyer's advisors in negotiations. This allows you to achieve a result that matches your wishes for a change of ownership.

Pitfall 5:
You choose the wrong business broker

If, to avoid the first four pitfalls, you decide to hire a business broker, there are several things you should consider.

In principle, there are no 'wrong' business brokers, but there is a wrong match. Because advisors can have different skills and focus areas.

Therefore, you need to find a trustworthy advisor that you can rely on and trust. Someone who will help you find the most optimal solution for you.

Assess whether the advisor

have experience buying and selling businesses like yours
have direct access to a network of buyers - including foreign buyers
find buyer candidates that match your vision for the future of your business
have basic business acumen
is committed to your situation and your wishes
has solid experience in negotiating the financial terms of the agreement, such as valuation, earn-out, reinvestment of shares, etc.

Is Business Broker broker you need?

If you represent a company where you're considering a change of ownership, you may have discussed how best to achieve a smooth sales process that results in a transfer of ownership to the right buyer at the optimal price and terms.

The advisors at Business Broker all partners in the company, and we work in teams of two, complementing each other's professional skills. We are your experienced and professional negotiators who have

in-depth knowledge of the market
access to a large network in the industry - shortening the path to the right buyer
Inside knowledge of the business world through own operational experience

With us, you get a coordinator who handles the entire sales process up to the final binding agreement, so you can focus on operations.