Question: I am thinking of selling my telemessaging call center. In addition to having my financials updated and my paperwork in order, what else could slow down the process?
Answer: The time between listing your business and accepting an offer can be anywhere from one to several months depending upon the size of the business, the selling price, and the availability of information for the sale. Once an initial offer is accepted, give yourself time to gather the due diligence material needed by the buyer and formulate a plan of action during the time until closing.
Many sellers may think they have all that is necessary to complete a deal during the due diligence process; however, many unforeseen challenges can present themselves, such as being unaware of liens against the business. That is why it is necessary to have additional time to address all of the relevant issues that may come up.
Also, always have an alternative plan in case the first option does not work out. Do not purchase another business or make any other major business or personal decisions until the closing paperwork is signed.
Sellers are often tempted to make immediate plans to buy another business, travel, cancel their office lease, or fire personnel once they have accepted an offer. Remember, though, because an offer is accepted does not mean the deal is done. Unfortunately, for one individual, the deal to purchase the business fell apart and the owner had huge business, financial, and personal repercussions, causing a great amount of undue stress, expenses, and grief.
A seller that has already spent the money from the business sale or made personal plans prior to the actual closing has their back up against a wall. They don’t have any wiggle room, and now they have to sell. This unfortunate circumstance now tips the scale in favor of the buyer. In this situation the seller often concedes too many demands, such as purchase price adjustments, a retention clause being added, or other expenses the seller would not normally accept. Also, the seller should put a time limit on the due diligence period, so that if the buyer decides to back out, there will be additional time to put the business back on the market.
In summation, treat each step of a business sale with caution and allow time to make any needed adjustments or gather additional information. Do not make immediate plans for the money received from the sale until the agreement for closing has been signed. Always have an exit strategy, and be willing to walk away from a deal if it’s not right.