The sale of your business: do-it-yourself or with professional assistance?

The sale of their own family business is, for many owners today, a necessity due to the lack of succession within the family. When the time comes to decide on a sale (transfer), the first decision to make is: am I going to sell my company myself, or do I hire a professional? In this article we review what arguments there are for one or the other possibility. The owner sells his own business

Distrust Many entrepreneurs in Spain do not rely on professional assistance either for the day-to-day management of the company, or for management as important as the sale of their business. The main reason for distrusting professional assistance seems to be a bad experience from the past, for which the employer distrusts all types of consultants, managers, agents and professional services. Costs The decision to carry out the sale of his company by the owner himself also seems to be motivated by the desire to save expenses and commissions that obviously entail professional assistance. Details of your company: confidentiality The third reason for wanting to take the sale under your own control seems to be the fact that no one else knows your company as well as the owner himself. That is why the owner feels like the only person capable of setting the right price and presenting his company as it should be.

A professional leads the sale There are many reasons to hire professional assistance when you want to sell your business. We highlight some obvious ones:

• Time saving

• Professional management

• Experience

• Find buyers

• Know how to negotiate
  

In Spain there are tens (if not hundreds) of thousands of companies for sale, however estimates are that less than 10% of these businesses manage to be sold over time (it can take years!). The vast majority close (between 2010-20, more than a million!). By comparison, in the US they are almost 20% of all companies that sell annually. However, there are a few important reasons, in addition to the reasons already mentioned above, that prevent many owners from considering hiring a professional. The owners wait too long to make the decision to sell. Once taken, they want their company sold the next day.

Many professionals are not true professionals, at least not in business sales. Many of them are actually real estate agents, managers, lawyers or have another trade. They know one part of the sales process and try to downplay the other areas. Most professionals from different fields do not like to share commissions. In many cases it is again a matter of trust (don't trust your own counterpart), as well as a simple display of greed. They would rather harm their clients' interests than (what they think are) their own, and do not see that their own interests are better served by thinking of their clients'!

Professionals seek exclusive contracts, and once obtained, they do not do the work, considering that the commission is already insured. Owners do not have as diverse contacts to find buyers as they may have a professional.

An owner cannot afford to drop his business for lack of dedication to the day-to-day by trying to sell his business himself.

Business owners should better investigate the credentials of a professional: what is their experience, their accreditation, their plan for their company. Like any supplier, a professional must be able to convince the owner of his proper management and the owner must have blind trust in the professional.

A professional would always explain to an owner and potential client what the process of a sale will be, what must be prepared, how long it can last, what the reaction and tactics of those interested will be, etc. etc

Many owners entrust a friend or relative to take charge of the sale. It is actually the most dangerous thing to do. Friends or relatives who are not professionals in business sales either try to hide their lack of knowledge towards their owner friend, giving them false information, sowing distrust towards real professionals and blocking the sale with unwise advice. If you think of selling through a friend, you have to choose: keep your friendships or sell your company.

Free stuff is free for a reason: they don't have a price because they have no value!

It is preferable to pay for something well done than to get something for free that not only does not work for you, but in many cases, seriously harms you. How many real professionals do you know who work for free? The free ones are not professionals, they do not know your company and cannot value it. They set a price that turns out to be unobtainable, while raising false hopes with the owner. In many cases they ask for an exclusive contract knowing that at the high price they will never sell their business. But the owner is delighted: they promise him a high price and he doesn't pay anything in advance! The saying says it all: the cheap turns out to be the most expensive.

Once the exclusive representation contract is signed, no interested parties arrive. The representative does not do his homework. You already have the client exclusively, so you care less. In addition, he did not receive any advance payment and thus does not make the promotional effort as it should be. They treat their portfolio like a bingo or lottery game: have a lot of businesses for sale in the portfolio, and luckily, some sale will come.

Your business has become a lot in a numbers game. If the owner insists, they will propose to lower the price. In the end, they will be forced to sell at a much lower price and pay a commission to the "professional" for a job that is often poorly done. Or wait for the contract term to expire and waste a lot of time…

Now, what should an owner who really wants to sell his business do?

1. Learn about the process. A true professional will inform you without any commitment;

2. Take the necessary time;

3. Set objectives in time;

4. Have a budget for the process (of time and costs!);

5. Set who can take the sale:

   • The same (which means spending time on your own preparation and education, and then investing time in the very process of promoting, negotiating and (hopefully) selling your company).

   • A professional (meaning that the owner has to research who the professionals are, their credentials, and then negotiate their hiring).

Sometimes a business owner has no other option than to sell his company on his own (there is no professional in his region/with knowledge of his sector). For these cases, there are services that can help you so that you can be better prepared to face the process of selling your company.