Recently I reread a study that had been conducted by Newport Partners in 2007 to determine what successful business sellers would do differently if they had to do it all over again.  The results are extremely important for all business sellers or business owners looking to sell their businesses.

The study interviewed 100 Canadian business owners who have sold businesses in the last five years.

Business Owners are selling their companies as a reactionary process, instead of planning the process out methodically. When asked why they sold their businesses, they received the following responses:

• 26% “I received an attractive offer"

• 14% "I needed more capital or strategic support"

• 13% "sale was motivated by partners or shareholders"

When asked if they had planned the sale in advance:

• 23% planned the sale in advance, 62% wish they had done so

All professionals and sellers agree that selling a business is much more successful when methodically planned in advance.  This statistic means that many business owners are leaving a significant amount of money on the table, and experiencing more angst in the process than they should be.

Business Owners are not getting the proper advice when selling their company. 81% of the respondents relied on advice of their attorney, and 68% relied on their accountant for advice.  Only 32% hired a Mergers & Acquisition Intermediary, Investment Banker, or broker.  71% of the business sellers recommend you select an advisor experienced in business sales, but only 40% of them did.

The process of selling a business always appears on the onset to to be a simple sale, much like selling a building or a large asset.  The truth is sellling a business is very complicated, and there are a large number of traps and pitfalls involved.  You need to have the right team with you from the start, it is too important to learn as you are going along.

Sellers are not marketing their businesses to all the potential buyers, and therefore not obtaining maximum value for their business. Only 42% of the business sellers evaluated all types of buyers, but 74% recommend that other do that.  This is another reason why an outside business broker, or M&A intermediary is important to the process.  The business intermediary will know how to identify and market to a large range of prospective buyers.  Marketing businesses is their core expertise, and they have experience recognizing buyers that you might not have thought of otherwise who would have an interest in buying your business.

It is important to learn from others who have been through this process before, and heed their advice so that you get the maximum value for your company.

Princeton Capital Strategies, Inc.

Princeton Capital Strategies, LLC

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