08 Mar Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Axial entitled “The Avoidable Mistakes That Derail Deals” outlines several mistakes that commonly lead to failed business exits:
- Lack of Seller Preparation: Many sellers are not adequately prepared to sell their businesses before engaging with investment bankers. This lack of preparation can hinder the success of the exit process.
- Issues with Due Diligence: Due diligence is a critical part of the sale process, but it can uncover discrepancies or problems that jeopardize the deal. Examples include discrepancies in financial performance, unmet projections, or undisclosed issues like deferred capital expenditures.
- Seller Readiness and Advisor Quality: Some sellers may not fully appreciate the implications of selling their business until they are deep into the process. Additionally, inexperienced sellers or advisors can struggle with technology or handling due diligence requests effectively, leading to delays or complications.
These mistakes underscore the importance of thorough preparation, transparency, and the involvement of experienced advisors in ensuring a successful business exit.
Click here to read the full article
A recent article from BizBuySell entitled “Business Growth vs. Exit Planning: Two Sides of the Same Coin” emphasizes the importance of considering exit planning alongside business growth. It challenges the traditional notion that business growth and exit planning are distinct phases, highlighting how they overlap and share common goals and strategies.
By addressing key questions related to growth and efficiency, team dynamics, and profitability, business owners can simultaneously prepare for potential future exits while maximizing the value of their business in the present. The article advocates for a paradigm shift where every day spent building a business is also a day spent preparing for an eventual exit, stressing the benefits of increased profitability and operational efficiency.
Ultimately, business owners should consider the long-term implications of their growth strategies and to prioritize maximizing the value of their business, regardless of immediate plans to sell.
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A recent article from Viking Mergers and Acquisitions entitled “Sell Wisely: Navigating the Letter of Intent and Creating Competitive Tension” emphasizes the importance of understanding the Letter of Intent (LOI) when selling a business and fostering competition among buyers to achieve the best outcome.
It explains the purpose and structure of an LOI, highlighting key elements beyond the purchase price, such as asset sale versus stock sale, working capital, and due diligence. The article provides strategies for negotiating favorable terms, navigating the non-binding nature of LOIs, and leveraging multiple offers to maximize value.
It also discusses handling exclusive offers and sole buyers and underscores the long-term implications of sale terms. Lastly, it recommends seeking expert guidance to navigate the complexities of selling a small- or medium-sized business effectively.
