The 5 Things Entrepreneurs Must Know When Selling A Business - Forbes

"While the truth may be painful, an entrepreneur who recognizes the realities they will face when selling a business will fare much better than one who does not.  All too often, an entrepreneur convinces himself no one will notice these issues and, once the sale is finalized, they all will be resolved.  But as deals are negotiated between buyers and sellers, these top five truths surface over and over again.

You Really Don't Matter

A business for sale will have a higher valuation, and ultimately a higher sale price, when the entrepreneur is not an important part of its day-to-day operation. Buyers want to purchase a business where the entrepreneur is not an important part of the business. This truth is counter-intuitive to many business owners. Many of them simply cannot pull themselves away from their businesses. For many entrepreneurs, their business is an extension of their being. Absent their involvement, the business does not grow, or in the worst case, even operate.

Buyers Know Which Employees They Will Keep

Nepotism is not always bad, just sometimes. Many businesses are well-run, profitable and employ members of the same family. However, it is not uncommon for buyers to find a business riddled with incompetent employees holding titles and taking home paychecks they do not earn. In some cases, such employees could be the entrepreneur’s son-in-law. In others, it may be the second or third employee who was hired many years ago. In the first case, the entrepreneur believes he is taking care of a daughter who is not in the business. In the second, his loyalty is to an employee who stuck by him in the early days when making payroll was a big achievement.

For all the reasons an entrepreneur may have for keeping an incompetent employee on the payroll, the truth is a buyer will quickly assess a team’s abilities and inabilities. Those employees who are not able to handle a post-closing transition period and step up to grow the business will be a drag on the business. This drag creates a cost to the buyer that will translate into a lower purchase price for the entrepreneur."

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.