Most of the owner mistakes I see in a sale don't happen before the business goes to market. They happen after. The decision is made, a broker is working, buyers are reading the numbers, and the owner starts running the business a little less hard. A sale of a smaller business commonly takes six months to a year from going to market to closing, and a buyer is watching the whole time.
1. Treating the decision as the finish line
Deciding to sell is a relief, and relief is a risky mood to run a company in. Having sold businesses of my own, I understand the pull. Owners stop chasing the new account because someone else will benefit from it. They let a price increase wait, or skip the trade show they have attended for years. None of it shows up in a week. Over two or three quarters it shows up in the sales line, which is exactly where a buyer is looking. The business you are selling is the one you run until the day you close, not the one you ran last year.
2. Letting the monthly numbers slip
Your buyer, and the bank financing them, will ask for updated financials as the deal moves along, often every month through closing. A price agreed on last year's earnings assumes this year looks about the same. If the most recent months come in soft, expect the buyer to ask why, and expect some to ask for a lower price or for more of it to be paid later. A business that holds steady or grows while it is for sale gives the buyer confidence. A business that drifts gives them a reason to reopen the price.
3. Cutting the spending a buyer will notice
Some owners decide that anything spent in the last year is money for the next owner. So the truck that needs replacing stays in service, the open position stays open, and the maintenance gets put off. It can make earnings look a little better on paper. It rarely survives a site visit. A buyer who finds worn equipment or a crew stretched thin will price in the cost of catching up, and usually at a higher number than it would have cost you. Keep spending what the business normally needs to run well.
4. Giving the deal all of your time
Diligence requests, buyer calls, meetings with the lender: a sale takes a surprising number of hours, and an owner who handles all of it personally pulls those hours out of the business. Let your broker, your accountant and your attorney carry what they can. If someone on your team already knows about the sale, have them pull documents. Your main job during the sale is to keep the business performing, because that performance is what the buyer is paying for.
5. Making big changes without telling the buyer
Once a letter of intent is signed, the buyer expects to receive the business they agreed to buy. Purchase agreements commonly require the seller to run the business in the ordinary course until closing. Signing a long new contract, changing prices across the board, giving significant raises, or taking on a major customer on unusual terms can all be reasonable decisions, but they change what the buyer is buying. Talk them through with your broker and the buyer first. A surprise found late in diligence costs more trust than it is usually worth.
The takeaway
A buyer is pricing the business you run until closing, not the one you described when you went to market. Keep selling, keep spending what the business needs, keep the monthly numbers steady, hand off as much of the deal work as you can, and check with the buyer before any major change. Owners who keep their attention on the business give a buyer the fewest reasons to revisit the price.
