There is a common characteristic I find among business owners: They have a tendency to ease up as they enter the selling process. They see the goal line and put their business on autopilot.
This often happens after there has been a successful meeting with a potential buyer and the Letter of Intent (LOI) has been signed. The seller concludes they’ve made it, breathes a sigh of relief, and feels there is no reason to keep busting their butt to keep the numbers trending up.
Unfortunately, 50% of agreed upon transactions do not close so there is a pretty good chance the buyer with whom you’ve just “clicked” might back out. Remember that once the LOI is signed, there still may be 60-120 days before closing when you factor in due diligence, finance approvals, and applications for licenses. The reason many deals do not close is that the numbers during this time start heading south. Even with only the most recent quarter declining, a buyer may get cold feet or at least seek a reduced price based on the current numbers.
You may be selling because you are simply burned out. Buyers realize this could be a reason you are exiting, yet they don’t want to buy a business on the downswing.
Once you’ve decided to sell your business, give yourself a pep talk and get your second wind. Put the pedal to the metal and grow your revenues and profits. The success of your sale depends on it.
This article was written by Sam Thompson. Sam is the president and owner of Transitions In Business, a Minnesota based M&A firm that specializes in selling healthcare, business to business, transportation, manufacturing, distribution and IT companies. Sam is a Certified Business Intermediary who has successfully guided countless business owners through the sale or merger of their company. Prior to becoming an intermediary, Sam was a successful CEO and business owner for 29 years before selling his $16 million business.