This blog post discusses why businesses don’t sell. It explores the financials, the unrealistic valuations and decreasing revenues and much more.
The article provides readers with an understanding of what they are likely feeling if they have been contemplating selling their business but haven’t yet taken any action or made any progress. This blog post also offers advice to those who believe it’s time for them to move on from the company they’ve built from scratch or inherited, but just can’t seem to make themselves do it. If you’re in this boat – read on!
Financials are Incomplete or Incorrect
Unclear or incomplete financials are the main reason a business doesn’t sell.
If you don’t have clear, up-to date information in your finances many buyers will simply walk away from the deal because they do not want to be involved with incomplete or dirty data that could potentially impact everything else later on down the line. It might also kill any potential deals if someone is looking for finance as it may put them off immediately due to lack of transparency. This would end their interest straightaway, so make sure your financial records are not lacking!
A business owner should make sure their books are clean and up to date. Without them, one may not be able to accurately show prospective buyers or lenders how well the company is performing financially. Lacking records will give people reason for concern that they might contain personal expenses or messy information.
Unrealistic Seller Valuation Expectations
The price a business is listed at is one of the critical elements to successful sale.
Emotional attachment and inexperienced brokers can prevent potential buyers from establishing communications, making it extremely difficult for an unrealistic seller valuation expectation to be defended if they have been priced unrealistically.
The typical outcome will involve this strategy having negative impacts on selling your company as it may lead to difficulties in communicating with interested parties or deter them altogether due to its unattainable pricing nature which leads the listing languishing in marketplaces without any buyer interest for months or years.
Decreasing Revenues and Profits
When a business is showing declining revenue and profits, alarm bells start ringing with buyers. For those businesses which have deteriorating financials, the seller should be able to articulate accurate reasons for the decline.
Both lenders and buyers will want to carefully examine historical earnings as well as recent trends in profitability before making an offer on any company that has experienced decreasing revenues or net income over time.
Other Reason Why Businesses Don’t Sell
- Above are the three major reasons why a business doesn’t sell. Here is a list of more minor reasons not to be overlooked.
- The business’s owner is aging, slowing down the company and causing diminishing revenue growth.
- The family has several members in top management positions making it difficult to run without them all being present.
- One or two customers are more than 25% of total sales for the year.
- Globalisation threatens to make their industry obsolete. Either a customer leaves, or small companies consolidate into larger ones that aren’t as interested in purchasing an enterprise with so much competition between themselves for ownership rights.
- Failing to take time preparing the business for sale left little interest from potential investors who wanted strategic planning on how they would improve operations before any purchase was made potentially leaving both sides disappointed.
- The selling process did not go smoothly for this business owner. They were unable to recognise how important some of their “perks” would be in a financial context when it came time for them to sell off shares.
- The seller was also ignorant about what kind of due diligence and related processes that they might have had with potential buyers or other advisors; as such, the lacklustre information given back from these sources led directly into more confusion on behalf of those involved. Lastly, though hiring a business broker who is familiarised with both local markets and buying/selling procedures could have been helpful here, unfortunately there’s no substitute once you’re already neck-deep into an agreement like this one.
We can help you identify the reason your business is not selling. If you are unable to determine why your company isn’t generating any interest, we invite you to schedule a free consultation with Toowoomba‘s professional business broker Marc Philips. This will allow us to discuss all of your options for moving forward.
Do you think one or more of these reasons could apply? Contact our office today at +61 455 150 990 and find out how we can make it happen!
Why Businesses Don’t Sell
Sydney born, having spent six years serving the community as a New South Wales Police Officer before deciding to relocate to the UK where he pursued his passion for sales, the financial markets and the real estate industry.
15 years as a licensed agent, ten of those years in fast-paced markets of the USA and the UK, Marc is an expert in business brokerage.
Business owners are invited to consider Marc when seeking a business to buy or sell in Queensland with local knowledge in the South East Queensland market including Brisbane, Gold Coast, the Sunshine Coast and the Darling Downs.
Local knowledge and surgical negotiation skills mean a keen eye on every detail. Marc has a profound knowledge of legal frameworks in all aspects of business acquisition and sales process.