One of our mantras is: “Go ugly early.” When you’re selling a business, put those landmine issues on the table right away. Whether you’ve just lost a customer, your backlog isn’t what it was, or you’re operating at capacity—get it out ASAP.
‘Why would I do that?’ you may ask. ‘Won’t it turn away buyers before they even know about my amazing company?’ Yes it will…but in a good way! Providing clarity around your business flaws accomplishes 2 major purposes:
- The entire process is more efficient. For example, if customer concentration is a no-go issue for a buyer, we’re able to flush them out early before any time or money has been spent.
- Transparency brings credibility, establishing you and your advisors as honest, ethical people…not those hiding things. This goodwill will go a long way in negotiations.
In simple terms, if it is potentially going to be an issue for a certain type of buyer, don’t waste your time, energy or money courting them as the answer will be No…either at the beginning or towards that time you believe you are set to transition. And if not an outright No, then ‘a haircut’ (aka reduction in price, change in terms), will occur! To find the right buyer for the right price without massive re-negotiations – Go Ugly Early!