Entrepreneurs need their own team to navigate the sales process.
posted by: Josh Klassen
Jun 4, 2019 10:44:55 AM
Not a Record to Brag About
Forbes has reported that “approximately half of all deals fall apart during the formal due diligence stage, and one of the most common reasons this happens is due to buyers uncovering issues which the sellers didn’t’ disclose earlier.”
Transparency Can Be Hard For Business Owners
Most established business owners have better than average marketing and advertising skills if they have been successful. As a result, they know how to market the shiny advantages of their business and they also know how to hide their challenges. No one likes to show their warts, and everyone wants to negotiate the maximum price. The normal thought process that showing the warts is not synonymous with best price urges sellers to “hold back” on material facts that are negative to the business. Counter-intuitively however, this mode of operation is potentially the most costly.
The Why’s and How’s of Disclosing:
There is no perfect business. Every business has challenges and you’re business will be a shining star in buyers' eyes, if you disclose them early, and have a plan to help the buyers mitigate those challenges. Stack the cards in your favor by fully disclosing the warts. Full disclosure is the best chance of actually closing the sale with the best price.