Here are seven more reasons that your business did not sell or sold at a steep discount:
6. Bad Location or Lease: A great franchise in a lousy location makes for a failing business. Also, too high a rent as a percentage of sales can make it tough to survive. Thirdly, if your landlord won’t play ball with the buyer or the buyer’s bank, it can queer a deal.
7. Poor Growth Outlook: The old adage goes “Buyers pay based on your history in anticipation of the future”. If the future prospective sales don’t look that rosy, why would a buyer take the plunge?
8. Out of Favor Industry: Florida construction companies for sale in 2008 are taking longer to draw interest, even the good ones. They are getting tarred with the same brush as failing companies. The key is to stand out versus your peers.
9. “One Man Band” Syndrome: Entering parties are looking to buy a company with good systems and procedures in place. If they see an Exiting owner who is frazzled, over-worked and whose company’s existence depends on him; that is not very appealing. Next…
10. Unrealistic Price: See Point #5 from the prior post, It will not Support Financing. You think your business is worth $5 million and an unsophisticated buyer will pay $5 million (it rarely happens) but the bank, backed by an appraisal will only loan $2 million.
11. Sales/Cash Flow trending down: This is part and parcel of point #7. Unless your business is distressed and a turnaround professional is called in, and Entering Party wants to see plenty of business in the pipeline and margins improving.
12. Not willing to give out enough data: I see this from time to time. Exiting Clients are (rightfully) worried about sharing too much data. But sometimes it goes beyond that. What are they hiding? Has trust become an issue? Screening Entering Parties up front to make sure they meet the buying criteria will prevent this. A well-written Non Disclosure is a must.
These are the common reasons that your business didn’t sell. Now that you have identified the problem, you can take steps to rectify it and try again.