Common Pitfalls to Avoid When Selling Your Middle Market Company


Selling your middle market company can feel pretty overwhelming for business owners. It’s a complex journey, filled with challenges like figuring out the value of your company and navigating through negotiations. Even the most prepared entrepreneurs can hit some unexpected hurdles along the way. But don’t worry — with some thoughtful planning and foresight, you can foresee and tackle many of these obstacles. In this article, we’ll dive into the typical issues business owners might face when selling their middle market company and share some down-to-earth advice on how to handle them like a pro.

#1: Inadequate Preparation

You know, one of the biggest stumbling blocks folks face when they’re trying to sell their middle market company is simply not being ready enough. It’s like showing up to a big game without warming up — you’re just not going to perform at your best. So many business owners think they can just breeze through the prep work, but boy, are they in for a surprise!

You see, getting your company ready for sale takes a whole lot more time and effort than most folks realize. You’ve got to dot your i’s and cross your t’s when it comes to your financial paperwork and making sure your day-to-day operations are smooth as butter. Think of it like sprucing up your house before you put it on the market — you want everything to look spick and span.

Here’s the kicker: Start prepping well ahead of time before you even think about listing your company for sale. And hey, don’t be afraid to call in the cavalry — financial advisors and business consultants can be real lifesavers. They’ll help you whip everything into shape so that when potential buyers come knocking, your company shines like a diamond in the rough. Trust us, it’ll be worth every bit of effort in the end!

#2: Unrealistic Valuation Expectations

Getting the price tag right for your company is the secret sauce to drawing in interested buyers and sealing the deal. But here’s the thing — lots of business owners get a bit starry-eyed and set their expectations on Cloud Nine when it comes to their company’s value. And you know what happens then? They slap a hefty price tag on it, scaring away potential buyers faster than you can say “sold.”

Here’s the lowdown: link up with savvy valuation experts who’ve been around the block. These folks know the drill, crunching numbers based on your financial performance, what’s cooking in the market, and where your company could spread its wings.

Now, the real game-changer? Stay flexible with your valuation expectations. It’s like fishing — you’ve got to be patient and willing to adjust your bait. Being open to different numbers increases your chances of finding that perfect match between buyer and price. So, let’s keep it real and find that sweet spot where your company’s value shines and buyers can’t resist taking the plunge!

#3: Lack of Confidentiality

Alright, let’s talk about keeping things hush-hush during the whole selling gig. It’s like trying to keep a surprise party under wraps — you want the big reveal to be epic, right? Same goes for selling your company — keeping it on the down-low is key to keeping its value intact and making sure your daily grind doesn’t go haywire.

But here’s the kicker: sometimes, leaks happen. Like when you accidentally spill the beans about the surprise party to the guest of honor. To avoid that in the business world, you’ve got to set some ground rules. Figure out who on your team gets the VIP access to the super-secret sale info and make sure they’re sworn to secrecy.

Oh, and before you spill any beans to potential buyers, get them to sign on the dotted line of a nondisclosure agreement. It’s like making them promise not to blab about the surprise party until the big day. Simple, right?

Now, here’s a pro tip — bring in the experts. Get yourself an M&A advisor who knows the ins and outs of keeping things hush-hush during a sale. They will act as the bodyguards for your business secrets. So, let’s keep it quiet, make the sale epic, and avoid any unwanted drama, shall we?

#4: Overlooking Due Diligence

Due diligence is the backstage pass where potential buyers get to peek behind the curtains of your company before they commit. Picture it as your company’s report card — you want it to be top-notch, right?

Skipping out on due diligence or not having your paperwork in order is like showing up to class without doing your homework — major red flags all around! You don’t want to give buyers any reason to doubt your company’s credibility or value.

So, what’s the game plan? First things first, get your ducks in a row. Whip up a due diligence checklist well in advance and gather all the necessary documents and info. But here’s the real magic: be open, be transparent, and be proactive. The more forthcoming you are during due diligence, the more trust you build. And trust us, a smooth due diligence process can be the golden ticket to sealing the deal without a hitch.

#5: Ignoring Post-Sale Considerations

Let’s not just focus on the hustle and bustle of selling your business — we’ve got to think about life after the sale too. You have to plan for what comes next once the curtain falls on this chapter of your journey. Trust us, overlooking things like taxes, passing the torch to the next leaders, and your personal financial goals can be like stumbling into a maze blindfolded — full of unexpected turns and missed chances.

After the sale isn’t the time to kick back and relax, it’s the time to plan your next move. Think about it — you wouldn’t leave for a road trip without a map, right? Same goes for life after the sale. Get yourself a squad of financial advisors and tax gurus. These folks are your navigators, helping you chart a course that aligns with your long-term dreams and ensures a smooth transition to the next phase of your life.

Let’s Recap

Selling your middle market company isn’t a walk in the park for us business folks. It’s like navigating a tricky maze full of challenges. But hey, if you spot these obstacles ahead of time and tackle them head-on, you’re in for a smoother ride. Plus, you’ll amp up the chances of scoring a successful sale that’s a win-win for you and your company.

Remember to prioritize preparation, maintain realistic expectations, uphold confidentiality, facilitate due diligence, and plan for life after the sale. With a solid game plan and some strategic guidance, you’re not just navigating the sale process — you’re doing it with confidence.

If you’d like assistance navigating this process, the seasoned advisors are ready to tackle it head on with you!