3 “Myth-takes” FSBOs make!

3 “Myth-takes” FSBOs make!

What is a FSBO? A business for sale by owner.

Why is it a mistake for an owner to try and sell their own business?

1. Don’t know value

What the owner paid for it, what other businesses are advertised for, and what outdated rules-of-thumb (ROT!) are supposed to apply may have no relationship to today’s value. Price it too high and serious buyers won’t even look, price it too low and miss out on hard earned capital gain. Specialist professional brokers have access to the latest statistics on business sales, industry research, and modern methodologies to provide accurate appraisals.

2. Thinks selling a business is like selling a house

Yeah, right! Selling a business is a much more complex business. Every business is different and business brokers may have to deal with landlords, accountants and franchisors, as well as financiers. There may be licensing issues, plant lease transfers, supplier and employment contracts, and tax considerations. There is often a number of legislative matters that can impact a business sale. An experienced business broker can guide the owner through all these pitfalls and protect against post-sale problems.

3. Imagines will save on paying a commission

This is a probably the major mistake FSBOs make. Have they really the time (or expertise) to prepare a selling information memorandum, write and place ads, (costs money), show people through (including tyre-kickers) and explain financial accounts (most need explanation). And confidentiality is out the window – what are the risks of your staff, suppliers, customers, and competitors knowing your business is on the market?

Listing with an experienced business broker ensures the business is promoted professionally through a multi-pronged marketing strategy (internet, print, direct mail, database) and negotiations are handled competently to achieve the highest possible price with the least problems.


Clyth MacLeod, Managing Director of Clyth MacLeod, Ltd., in New Zealand has over 40 year’s experience in business broking and business valuation. Clyth is also a director of Business Appraisals Ltd (business valuers), BizStats Ltd (a national database of business sales information) and Australasian Business Valuations Ltd (consultancy). The only business broker to be awarded a Life Membership by the Real Estate Institute of NZ and a Fellowship by the International Business Brokers Association he remains active in the industry and committed to leading a professional team.

 
 
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