After months and months (or possibly years) of thinking, you have finally decided: I am ready to sell my business. Congratulations! This decision is a milestone for any business owner, one that does not come lightly, and one that changes your future and impacts the time ahead for your company as well as your life. Now that the decision has been made, where to begin?  We recommend starting by talking to a few potential advisors and business owners that have sold their business in the past.  

What is not often talked about are some of the common mistakes seller’s often make when trying make their exit. Do you know what they are? And more importantly how can you avoid them? 
 
Perhaps the most obvious, but often the most overlooked, is the lack of upfront preparation. While it is unlikely that as a business owner you simply wake up one day and decide to sell your business, it is important to note how much time should go into preparations. On average, it is recommended to do 6-12 months of preparation before engaging in the process.  Upfront preparation is not limited to but can include cleaning up any legal proceedings, independently auditing or reviewing your financials, ensuring your management team is strong enough to impress a buyer that they can run your company without you, shoring up recurring revenues that will help support your potential business valuation, etc. Upfront preparation can lead to a more successful outcome and minimize your business and financial risks down the road. 
 
Being unprepared for the depth of diligence that you will most likely have to face is another common mistake. It may be your first-time diving into the mergers and acquisitions world, and that is okay. It is critical to understand that the amount of information that will be needed by a potential acquirer. Once you start your exit process, the scrutiny throughout is extensive and will cover the entirety of your business’ life. Ownership records, financial records in order (having a 3rd party audit or review may help put a buyer more at ease), customer sales, distribution agreements, R&D Pipeline, regulatory files and so much more will need to all be made available. Even with upfront preparation, there will undoubtedly be additional documents needed and questions you will need to get answers for during the diligence process. Any buyer interested in purchasing your company will have topics that are important to them and their own endeavors. Being prepared, open, and responsive in the diligence process will only help the process move forward more smoothly.  

Another common mistake is to not include your key management team in the M&A process. Of course, there is some risk with doing so. However, in most cases, if you incentivize them in the right ways, you’ll find them to be valuable team members in the sale process. And, as mentioned above, you’re going to have a lot to do during the process so you’ll need help. 
 
Getting the history of your company put together takes quite a bit of time. While you are busy gathering and organizing, forgetting to run your business is one of the fastest ways to hurt your exit. The process can be long, sometimes longer than you expect, and is certainly a great deal of work. To state the obvious, it is not an option to sideline the day-to-day operations and future planning of your business while working to sell. However, it happens so be careful.  

During any sale process, it is key to drive your business forward as if it was not going to be sold. You should manage your business every day as if it is yours for the future because it is – until the deal is closed. Taking the time to be sure to shore up for your bottom line for now and for the future as buyers expect positive margins and are encouraged by growth. A dip in performance month to month or quarter over quarter can take out even the most enthusiastic of buyers.  

In summary, be prepared and get good advisory help and you’ll have an exciting outcome. And your company will have a bright future with or without you. Your personal and business legacy will remain strong.