Mergers And Acquisitions-4 Seller Mistakes To Avoid
Added on August 6, 2018
Selling your company is not an easy task. It is a time consuming process that can be difficult and stressful. You must plan with caution, fully understand the dynamics that are involved with the negotiation procedures, and rely on experienced professionals to provide the proper advice. Business owners, CEO’s, and management teams that have little to no experience in mergers and acquisitions often make costly mistakes. These blunders can lead to a lower selling price, less favorable terms, and often ruin the deal altogether. The following information outlines the top four seller mistakes to avoid.
Mistake #1- Lack Of A Competitive Sale Process
Supply and demand is key to the profitability of any business, the same holds true when selling a company. The best overall deal for the seller occurs when more than one potential bidder is interested in acquiring the company. Sellers lose their leverage when negotiating with only one potential buyer and they often end up selling the business for less money and at far less favorable terms. Even the perception of multiple bidders can help the seller during the negotiation phase.
Mistake #2- Failure To Be Properly Prepared For The Time It Takes To Close The Deal
As the old saying goes “by failing to prepare, you are preparing to fail.” The M&A sale cycle can take upwards of six to twelve months to complete. Negotiations can be slow and lengthy. The seller must be aware of the time frame that it takes to close the deal and be patient throughout the process.
Mistake #3- Neglecting To Require All Potential Buyers To Sign A Non- Disclosure Agreement
Business owners and leaders are responsible for protecting the integrity of their organizations right up until the point that the ink dries on the P&S agreement. A non-disclosure agreement signed by all potential buyers goes a long way in accomplishing that. It can be an epic failure to engage in the extensive disclosure of private information without a fully executed non-disclosure agreement in place. This holds especially true when potential buyers are competitors.
Mistake #4- Overlooking The Online Data Room
An online data room contains all of the necessary documents and other pertinent information that potential buyers need in one easy to access place online. The online data room should include the company’s pertinent information to be reviewed by potential buyers such as financial statements, employee information, contracts, etc. to name a few items. The online data room will provide potential buyers with the ability to conduct their due diligence in a faster, efficient manner and can also be monitored to see exactly who is looking at what information.
These are 4 very basic mistakes companies might make while trying to sell their business without the assistance of professionals. Navera Group works hand in hand with various business brokers and investment bankers to assist with M&A transactions. We are here to help if you need any guidance with the process. Our team of experts will work hand in hand with your leadership team to ensure the best overall outcome for your company. If you have any questions, or would like more general information about our array of services, please contact us today. Phone: 617-356-7516; Email: Info@Naveragroup.com; Website: www.NaveraGroup.com