CEO Advisor Newsletter February 2019
5 Mistakes to Avoid When Selling Your Business
As a former CEO of a software company myself, I have built and sold businesses over the past 35 years including mergers and acquisitions management positions for Corporate America, as well as mergers and acquisitions advisory services for the past 15 years for my own firm, CEO Advisor, Inc.
Here are my five tips to help you avoid business sale pitfalls, missed opportunities, lost money and possibly having the perfect buyer slip through your fingers altogether.
Mistake 1: Not Planning Ahead or Waiting Too Long to Sell
Not planning in advance and especially waiting too long, can cause many business owners to miss their window of opportunity. It takes 6 months or more to sell a small to mid-size business. Planning is key to any successful business sale. You just never know when that perfect buyer will call you and is ready to make you an offer you can't refuse - if only you were prepared!
Mistake 2: Not Finding the Right Person to Represent Your Business
For continuity purposes, the same individual in the advisory firm that helps you with the preparation for the sale should be the same person and firm that sell your business. Otherwise, this can cost you a lot of time and money in the long run. Without this continuity of knowledge of your business coupled with the needed expertise, you may see no results and have to start the process all over again. Make sure to choose - and continue to work weekly - with a very seasoned, experienced business/M&A advisor. Make sure not to get passed onto a junior person, or have a junior person work on your sale behind the scene. This will be a disjointed and very costly situation that may not result in a sale at all.
Mistake 3: Asking Too Much or Too Little for the Business
Valuing your business at a very high or unrealistic minimum price for a business can destroy your chance to secure a buyer. Expecting to get top dollar for a business that generates little profit, has low Gross Profit Margin or has slow growth is simply bad business. Consider the size and health of your industry, comparable businesses, the economy, size of your business, growth rate, Gross Profit Margin, Net Profits, strength of your products, management team, and other factors when determining your value in preparation for a sale.
Another mistake is to value the business too low. Often business owners will price their business low because they are burned out, suffer from an illness or did not get good advice. Do your homework and listen to your business/M&A advisor. Review and assess your research about other business sales and make prudent decisions to optimize your sale price and increase your odds of a successful sale.
Mistake 4: Not Being Engaged in the Sale at the Proper Time
Selling your business will take a team of a business/M&A advisor, a corporate/transaction attorney and a CPA/tax advisor. Your M&A advisor will lead and manage the process but don't underestimate the time and focus it will take for the entire sale process.
Mistake 5: Taking the Wrong Offer or Buyer
Evaluate your options and make the best selection for the long term. Ask yourself, is this the best company to buy and operate my business? Can they quickly connect with my customer base and learn how to market effectively? When the business sale goes as planned, it creates a tremendous opportunity for both businesses. Part of the sale price may be a future Earn Out and you need to stay engaged, work with the buyer and continue your success as a team.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information or to schedule a no cost initial consultation at your office.
CEO Advisor, Inc. Advises Rhythm Interactive, Inc. on its Strategic Acquisition
Rhythm Interactive, located in the Irvine Spectrum area and central to Southern California, provides a broad range of digital agency services to meet the needs of corporate customers in the Western United States. Craig Cooke, CEO of Rhythm states, "Mark Hartsell has been our business advisor for several years and we were extremely prepared going into the sale process. His expertise, organization skills and experience were instrumental in securing the right buyer, expeditiously performing due diligence and advising us through the closing." Pete Bohenek, President of Rhythm adds, "This strategic acquisition by Code and Theory is a true win-win and we are extremely excited to be part of their team. It is the perfect fit and we will continue to operate as Rhythm as we have done for the past 23 years."
As trusted business advisors since 2004, CEO Advisor, Inc. provides a hands-on, disciplined approach to working directly with CEOs, presidents and business owners of small and mid-market companies. We advise CEOs by focusing on growth, business strategy, planning, growth capital and mergers and acquisitions advisory services to grow their businesses to the next level, while increasing shareholder value for their optimal future exit.
Mark Hartsell, President of CEO Advisor, Inc. states, "Rhythm is one of the fastest growing digital agencies in Southern California. They have the expertise, strong management and professional approach that sets them apart in the Southern California market. Rhythm's growth, coupled with their extremely high quality clients, are a result of their deep expertise in web applications, analytics, design and digital marketing services. With the acquisition by Code and Theory, there is no limit to their future success."
About Rhythm InteractiveRhythm provides a full range of web and mobile applications, digital infrastructure and integrated marketing solutions for mid-market and enterprise companies. Rhythm's in-house team is located in Irvine, CA in the heart of Southern California. The company services multiple market segments with a focus on the healthcare, real estate, manufacturing and automotive industries. For more information, contact Rhythm Interactive at (949) 783-5000 or visit www.RhythmAgency.com.
About CEO Advisor, Inc.CEO Advisor provides business consulting, growth capital and mergers and acquisition advisory services to effectively meet the specific needs of small to mid-size companies in a wide range of industries, including software, technology, media, printing, professional service firms, healthcare, manufacturing and many more. CEO Advisor's mission is to advise CEOs, presidents, business owners and principal executives with the needed expertise and focus, coupled with hands-on advice to grow your business to the next level and realize your life's dream through a successful exit.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.