Well, maybe not everything, but let’s explore the truth behind some common misconceptions that either hold business owners back or lead to costly mistakes.
I’ll Sell It When I’m Ready to Retire
Myth: Business owners often believe they can sell their business on their timeline, right when they’re ready to retire.
Reality: Preparing a business for sale takes time – often years, unless you’re happy to sell under value. Market conditions, economic factors, and the readiness of the business itself can significantly impact timing. Waiting until you’re emotionally or physically done can lower the value.
My Business Is Worth What I Think It’s Worth
Myth: Owners often overestimate the value of their business, assuming it’s worth more because of sentimental value or the years of hard work.
Reality: Buyers value businesses based on market conditions, synergy opportunities, profit and cash flow, plus future growth potential. A professional valuation is essential for setting realistic expectations.
The Buyer Will Come to Me
Myth: Some sellers believe buyers will seek out and approach them when it’s time to sell.
Reality: Most business sales require proactive effort, including networking, marketing, and engaging business advisors to find the right buyer.
I Can Handle the Sale on My Own
Myth: Owners may assume they can save money by avoiding business advisors, lawyers, or wealth planners.
Reality: Selling a business involves complex negotiation, legal, financial, and operational considerations. Expert advisors can help maximise value, avoid pitfalls, and navigate important negotiations.
I’ll Get Paid Fully Upfront
Myth: Sellers often expect to receive the full sale price in a single payment at closing.
Reality: Many deals involve instalment payments, earnouts, or seller financing, where part of the payment is contingent on future performance.
The Business Will Run Itself During the Sale Process
Myth: Owners sometimes believe they can focus solely on the sale and let the business operate on autopilot.
Reality: Neglecting day-to-day operations can hurt business performance, lowering its attractiveness and value to buyers.
I’ll Still Be in Charge After Selling
Myth: Owners assume they’ll retain significant control or involvement post-sale.
Reality: Depending on the terms, the new owner may want a clean break with the sellers. In some cases, sellers might stay temporarily for a transition period, but this is negotiated upfront.
Family Succession Is Easy and Assured
Myth: Passing the business to children or family members will be smooth and straightforward.
Reality: Family succession can be fraught with emotional, financial, and relational challenges. Not all family members are willing or capable of taking over.
I Don’t Need to Plan for Taxes
Myth: Some business owners overlook the tax implications of selling their business.
Reality: A business sale can result in significant tax liabilities. Tax planning with professionals, in advance of a sale, can help minimise the impact and structure the deal more favourably.
I’ll Be Set for Life After Selling
Myth: Owners may assume the sale proceeds will secure their financial future indefinitely.
Reality: This depends on the sale price, tax liabilities, and personal financial planning. A financial advisor can help manage the proceeds effectively and efficiently.
My Business’s Brand and History Are Enough to Sell It
Myth: Owners may believe that a strong brand or legacy guarantees a buyer.
Reality: While reputation helps, buyers prioritise profitability, systems, scalability, growth potential, and risk reduction over legacy factors.
Only Struggling Businesses Get Sold
Myth: Some believe selling signals failure or weakness.
Reality: Many thriving businesses are sold for strategic reasons, such as pursuing new ventures, retiring, or capitalising on market timing with a buyer that can realise synergistic value.
Your Exit, Your Legacy
Exiting a business is not just a transaction; it’s a milestone in your entrepreneurial journey. By shedding these myths, you’ll be empowered to make informed, confident decisions about your future. Whether you’re looking to retire, pivot to a new venture, or simply take a step back, a well-executed exit ensures you reap the rewards of your hard work.
How We Can Help
Our team of experts work with business owners throughout the entire exit planning and deal process – from accurate valuations and effective marketing through to negotiations, due diligence, and finalising the sale.
With the right support and preparation, you can achieve your goals and maximise the rewards of selling your business. Ready to talk? Contact Geoff Pinder (07717 874357) or Nick Lankester (07760 270728) for a confidential discussion, and find out more about our Business Exit Review service.