So you want to sell your business but there are some aspects of it that, frankly, you’d like to sweep under the negotiating room carpet.
Bear in mind, however, that trying to hide your businesses weaknesses during the selling process may not do you any favours. In fact, some buyers may even see your business’s ‘soft spots’ as opportunities for growth.
Always remember that a buyer and a seller are like jigsaw puzzle pieces, trying to find the right fit.
Before you put your business up for sale, undertake a SWOT analysis. This is a simple task - a pros and cons list if you will - that categorises the Strengths, Weaknesses, Opportunities and Threats that exist within your enterprise.
You may be surprised, when everything is down on paper, by what you have let slip over the years, what is not as bad as you thought and what your business does very well.
This analysis will enable you to be resourceful when thrashing out the sale. Your buyer will probably carry out a due diligence investigation before seriously considering your business and if you are fully aware of the situation from your side, you will be armed for negotiation, rather than exposed at the critical moment.
A matter of perspective
When it comes to the sale of a business, beauty is most certainly in the eye of the beholder. What you may see as your weak points may be things your buyer has strong expertise in and they may not see them as an issue at all.
For example, your own perceived weaknesses may be that you are holding too much stock, despite having a great product and a loyal client base. In short, your sales are lacking.
Your buyer may be inspired by the product and will see your sales deficit as an opportunity to use their key strength - an expertise in sales and targeting new clients.
How about if you have a good, established sales base but your operating systems are out of date? Your potential buyer could well be a tech wizard who is not so hot at selling!
This kind of ‘win-win’ situation is worth waiting for, as it will make your business more attractive and so add value.
Choose your moment
When all factors are on the table, it will probably become apparent that the mixture of your business’ and your buyer’s strengths and weaknesses are a complex fit.
Whilst it’s good to be candid about the whole package of your business, don’t put yourself in a poor negotiating position by overtly documenting your weaknesses in any marketing material or information memorandum.
Bring perceived weaknesses up organically within discussions, and preferably in relation to some positive antidote your buyer may possess.
This way, you will retain control over your sale and can choose carefully how and when to reveal certain facts.
Don’t hide your business’s flaws – dress them up as opportunities and make that sale!
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