Every once in awhile we have a real disconnect with a would be seller. We work for sellers,and they become our clients when we accept an assignment to sell their businesses. But we are not mind readers,or magicians.
If you want us to help you exit your business, and realize a fair return on your investment, you have to give us the information we need to do the job. You also have to have your business ready to sell. Additionally you have to trust and communicate with us as changes occur in your situation.
That means that you have to have financial records that we can understand, you have to know and tell us what you have for assets, like equipment and fixtures as well as accounts, customer lists, and any other things of value, both tangible and intangible. Most importantly you also have to own up to problems, so we can figure out how to deal with them. I have to read the auction notices in the paper every Thursday, because every once in awhile I run into an ad for a foreclosure auction on a property where a client has told me they are up to date with mortgage payments.
Problems are going to come out during a buyers due diligence. If they have been hidden then the buyer is not going to trust us or the seller and 9 times out of 10 the sale will crash. If problems are disclosed, explained and dealt with up front, they often become non-issues, or can be dealt with effectively, and we can still have a sale.
We expect sellers to put the best possible spin on their business when they tell us about it. That is good, because it helps us figure out how to best present it in the marketplace. But it also has to be honest and realistic.
I recently sat in a store talking to the owner and asked him for the value of his inventory. He claimed he had $150,000 worth in a store where it was obvious that there was no more than $25,000 or $30,000 worth. There are no tax returns, or QuickBooks, or any other financial records to verify the level of the booming business he claims. How can we ever convince a buyer to even look at that business? For that matter, how can I trust what he tells me and repeat it to customers without risking my own reputation?
If you are planning to sell, ask yourself “what would I want to see for information about this business if I was looking to buy it?” We need at least that much information and will probably ask for a lot more.
Also, just to repeat a frequent offer we make, if you are like most small business owners and don’t really know how to prepare a business for sale, call us to help. Plan ahead, you are not going to want to, or be able to, run the business forever. Let us help you figure out what you need to do well in advance of your need to exit the business so that we can put it on the market in the best possible light when the time comes.
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