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"Only" 10,000 Hours to Become an Expert

ENLIGN DEAL TEAM | 03/12/2022
When it's time to sell your business and sign the definitive purchase agreement, you only get one chance to do it right. When trying to sell their business, many business owners have made critical  mistakes that were very expensive. When an owner trusts a untrained friend or family member to help them through the process, it happens more often than not. In some situations, business owners have even tried to broker their own deals. Let's look at some of the most common mistakes that have been made during the process when experts were not brought in to help. The cliche goes that it only takes 10,000 hours to become an expert.  That's 5 years of full-time effort and for professions as complex as business brokerage I would argue that number is more like 20,000 as the intermediary must be familiar with legal issues, financial issues, commercial real-estate issues, lending issues, banking requirements, deal structuring, federal and state regulations, environmental issues, supply chain issues, negotiation techniques, and marketing not to mention deep familiarity in the industries for which their clients operate. Not Putting Priority on Privacy We can't say enough about how important privacy is. When business owners try to do everything on their own, they often give important information to the wrong people, like unqualified buyer prospects or worse their competitors. Or, employees, suppliers, and customers might find out by accident that the business is up for sale. When confidentiality is broken, unexpected adverse things can happen, like an employee looking for a new job or a customer switching to another business. If any of these things happen, it can hurt the value of the business, make it take longer or worst case render the business unsellable. Providing the Wrong Financial Information or in Incorrect Formats If the person helping you sell your business is inexperienced, they might not know how to prepare important paperwork. In no circumstance should a non-licensed attorney prepare legal documents.  Also, if the financial records aren't checked out properly, it could hurt the numbers. This could cause buyers to make lower offers and be less interested or pass entirely out over concerns about accuracy. Incomplete or Inexperienced Deal Team Because of a lack of experience, you might also forget to include important people in the deal. For example, if a business owner is led by a non-expert or tries to do everything on his or her own, important people like the CFO might not be brought into the due diligence process. Even though a mistake like this might not kill the deal, it could cause delays and other problems. In the end, when it comes to a big deal like selling your business, it's time to rely on professionals you can trust. There are a lot of rules and steps that must be followed for a deal to go smoothly. Business brokers and mergers and acquisitions (M&A) advisors with a lot of experience will make sure that all the best practices are used and that you come out on top in the end. Remember that just because an individual claims to be an M&A advisor or business broker it doesn't mean they have the experience to sell your business, in your market, in your industry. Many private equity groups and home offices have M&A advisors and business brokers on a "black list" where they will not even consider their listings because of unprofessional past conduct. It is absolutely critical that when selling your most valuable asset that you have the best team on your side. Copyright: ENLIGN Business Brokers, Inc. FreedomTumZ/BigStock.com