If you're a business owner over 55, chances are you've started receiving a barrage of letters and emails from potential buyers interested in acquiring your company. While it might be flattering, it's crucial to approach these offers with a healthy dose of scepticism. After all, would you trust a stranger who knocked on your door offering to buy your house out of the blue? The same logic applies to your business, especially if you're planning for retirement.
The Pitfalls of Financially Motivated Buyers
Over the last 12 years and more than 100 successfully completed transactions, I've noticed a growing trend. Many business acquirers are driven solely by price rather than the value and opportunity your business presents. Here are some common pitfalls:
Lack of Resources
Some buyers simply don't have the financial wherewithal to offer a fair price. They might make an initial high-sounding offer but struggle to come up with the funds when it comes time to close the deal.
Lack of Understanding
Others may not fully grasp the intricacies of your business. They see the cost but not the value your business brings, from your loyal customer base to your well-trained staff.
Opportunistic Offers
Then there are the chancers—buyers who make lowball offers hoping to catch a desperate seller off-guard. These buyers rarely see the true value in your business and are more interested in getting a bargain.
Take the Initiative
If you're thinking about selling all or part of your business, don't just sit back and wait for approaches. Take the initiative and start planning your exit strategy early. Understanding the value drivers for your business is crucial.
Know Your Value Drivers
Identify what makes your business valuable. Is it your customer base, your brand reputation, or perhaps your unique product offerings?
Identify the Right Buyer
A complementary trade buyer with existing clients, resources, and staff will likely see greater commercial opportunities in acquiring your business. They are more likely to offer a fair price that reflects the true value of what you've built.
Be Prepared to Walk Away
Not all business buyers will be capable of acquiring your business. If there's no commercial synergy or the buyer cannot see the value in what you've created, move on. No deal is generally better than a bad deal. If you prepare properly and do your research, there will always be a better option moving forward.
Conclusion
Selling your business is one of the most significant decisions you'll make, especially as you plan for retirement. Your best defence is to plan and start your exit journey early. This gives you the space to walk away from a bad deal and wait for the right opportunity. Remember, the true value of your business is not just in its price tag but in the opportunities and synergies
By taking these steps, you can avoid falling into the trap of financially motivated buyers who see the cost of everything but the value of nothing. Instead, you can secure a deal that truly reflects the worth of your hard work and dedication. Contact VEXUS for more information or email: tony@vexus.co.uk
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