Expose the Warts Quickly
If you’ve ever bought a used car, you know how reassuring it is when the owner tells you about things - big and small - that have been repaired. And you really appreciate knowing about the repairs that are coming up in the near future.
When a seller is transparent about issues, trust is established and buyers are willing to work with them to make a deal.
As you prepare to sell your business, you’ll be in a position to establish trust with a buyer by proactively disclosing any problems you are aware of and providing insights on the unique dynamics of your business.
As buyers go through the due diligence process of examining business information, they often run into dynamics that if left unexplained, may cause them to walk away from finalizing a deal. If there is anything in your business that you feel may cause a buyer to be concerned, it’s a good idea to tell them about it before they discover it on their own.
Explain the Negatives
Be transparent about issues, events, or relationships that may become problems for buyers, such as issues with licensing, worker’s compensation, or a supplier relationship, to name a few. A buyer will appreciate knowing about these early in the sale process, rather than finding out through their own efforts during due diligence. “Expose the warts quickly” is the best policy.
Good buyers understand that every business has challenges. The best strategy is to work with your business broker to prepare explanations and discuss the best timing for informing buyers about possible issues.
Selling your business should be a win-win negotiation with a buyer. By being transparent and collaborative you set the buyer, your customers, and your team up for success. Plus, you walk away from your business with cash in hand and a clear conscience.