One of our mantras is: “Go ugly early.” When offering a business for sale, don’t hesitate to disclose potential challenges immediately, be it a recent customer loss, fluctuating backlog, or maxed-out operational capacity.
You might wonder, “Won’t this deter potential buyers before they recognize the value of my business?” It might, but consider this: presenting your business’s imperfections does two critical things:
- Streamlines the Process: By revealing potential deal-breakers at the outset, you filter out incompatible buyers before investing significant time or resources. For instance, if a prospective buyer can’t cope with customer concentration, identifying this early prevents unnecessary expenditure of effort and money.
- Builds Trust: Being transparent bolsters your reputation. It positions you and your advisory team as forthright and principled professionals. This trust is invaluable during negotiations.
In essence, if there’s a possibility that an aspect of your business might be a deal-breaker for a certain buyer, it’s better to discover it sooner rather than later. You’ll avoid wasting resources courting a buyer who will ultimately decline or demand compromises in pricing or terms. To secure the best-suited buyer without the headache of extensive re-negotiations, always…Go Ugly Early.