This article shows 32 situations that all buyers and sellers (and their advisors) cope with when they are situating themselves to be ready for dealmaking.
These are a few of the things that interrupt, stop or doom deals. Use this list to learn more about each topic so you avoid mishaps. This list also points to ways you can buy the right business the right way.
- Misunderstanding the playing field, players, coaches, owners and competitors.
- Marketplace realities unseen by you.
- Suspicious or contentious sellers.
- What sellers want to know—what they expect from buyers.
- What lurks behind the Balance Sheet?
- How business sellers manipulate buyers.
- When business seller-financing is a sham.
- Things sellers do before buyers arrive on scene.
- The playing field is tilted against buyers.
- Phases and obstacles through which you must navigate.
- How business buyers are blindsided by the seller’s employees.
- Interviewing the seller’s employees.
- Think about the perspective of sellers.
- Apocalypse underway for retail businesses.
- It’s not a pretty picture for many sellers.
- Who is selling whom?
- Buyer competition is key—for sellers.
- When competition is good . . . and not good . . . for you.
- Inside the buyers’ minds.
- Good deal or a dumb deal?
- Business brokers and other business transfer intermediaries.
- Who is trying to sell to you?
- Pricing businesses for sale.
- Preparing the seller and the company for sale.
- Merchandising businesses for sale.
- Analysis of purchase offers.
- Buyers must pleasantly upset sellers.
- Deal killers and deal killing.
- Sandbagging during dealmaking and post-closing. (Countering sandbagging.)
- Things that can destroy worthwhile transactions.
- Buyers face two kinds of competitors, one more dangerous than the other.
- Individuals seeking business opportunities. There is a horde of unemployed or inexperienced buyers; they bid against each other to create a seller’s market.
- Competitors of companies for sale. They want to “eat-to-beat” their competition. They realize that trying to grow their company by “fighting” their competition is the hard way. Whenever they get a competitive advantage, their competitors copy them. When they “steal” their competitors’ customers or employees, competitors do the same to them. When they launch a new marketing program, it takes time and money before they know whether it succeeds or fails; acquiring or merging with a competitor adds marketing clout and improves economies of scale. When done correctly, company growth by acquisition is faster, safer, cheaper and more profitable than investing more time and money in marketing to increase revenue.
[The explanation above illustrates how I explain the dos, don’ts and profit strategies in my book: How to Buy the Right Business the Right Way—Dos, Don’ts & Profit Strategies.]
Think about this: Seeing and understanding only some of the picture, when buying, selling, financing or advising a business, can be fatal.
Advisors and valuators who don’t know enough expose themselves to malpractice. Which can really make the day for litigation attorneys and their expert witnesses.
It comes down to this: How good or bad do you want your experience to be when buying or selling a business (or when you advise your clients)?
- To know (enough) or not to know? That is the question.
Read my book: How to Buy the Right Business the Right Way—Dos, Don’ts & Profit Strategies. (You can access it on my website.)
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Email Ted J. Leverette, The Original Business Buyer Advocate ® Since the 1970s.
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