When negotiating the sale of your business, there are hidden threats you may not be aware of – or may underestimate.
In my recent Label and Narrow Web magazine article, I talk about how some buyers wait to make a surprising move deep in the negotiating process. A surprise move can put an inexperienced seller off their game. Surprises make sellers more likely to accept an offer, counter-offer, or stipulation that is not in their best interests.
A buyer trying this kind of gamesmanship may try to convince a first-time seller that it is necessary to accept a lesser package to close the deal.
Sometimes that’s true. Sometimes it’s gameplay.
In the article, I compare this approach by buyers to a chess strategy where the bishops strike from the shadows. Some chess players use their bishops deep in the game when the opponent has forgotten about them. These surprise hits debilitate an opponent mentally as they prepare for their next move. It slices into their confidence.
In selling your business, you will want to lean on your adviser to anticipate surprise moves from the buyer.
When playing against someone ready to strike from the shadows, you need to have all the bases covered. You don’t want to be blindsided by anything or anyone during the selling process.
Whether it’s a surprise “attack” from the buyer or unexpected items of your undoing, you must protect yourself in all the places you’re exposed.
Here are ten items you should look at in your own organization and in that of the buyer.
- Pending lawsuits.
- Disorganized financials.
- Unpaid taxes.
- Workers who are misidentified as independent contractors or have documentation issues.
- Poorly-written contracts or customer agreements.
- Successors or managers who are unprepared to fill their roles in the post-sale environment.
- Basing the asking price on old information (too low or too high)
- Emotional interactions between the selling and buying team.
- Lack of stamina – mental and physical.
- Not being prepared and polished before entering negotiations.
If you recognize any items on my list, including a gap in your personal health, now is the time to act.
Many private sellers in our industry begin the selling process three to five years before their desired exit. During that time, we address the items that can kill a deal. We strengthen the seller’s positioning and proactively address areas where buyers might see red flags.
At LaManna Consulting Group, we work closely with clients to prepare for contingencies and plan for the unexpected. We write helpful articles like these for industry platforms. We send books and checklists to owners to help them make better decisions about how to sell their businesses,
Our goal is to support our clients through each step in the sale of your business so that when something unexpected happens, they can lean on our experience. Knowing we have in-the-trenches experience can give you peace of mind for this once-in-a-lifetime event.