Around the Web: A Week in Summary
A recent article posted on Business2Community.com entitled “How to Close the Deal and When to Walk Away When Buying or Selling a Business” explains the business sale process and how to differentiate between a good deal and a bad deal during the process. Closing a deal involves quite a bit of legwork, including producing a letter of intent, doing due diligence, acquiring financing, signing a purchase agreement, and actually closing the deal. These items can be easier with the help of a business advisor, broker, or attorney, but emphasis should be placed on the due diligence aspect: knowing the business inside and out is vital to a successful sale.
Walking away from a deal can be difficult for a motivated buyer, but is sometimes necessary to avoid emotional and financial disaster. The following red flags help to signify that it’s time to walk away:
- Undisclosed Problems
- Poor Credit Rating
- The Industry is in Decline
Being prepared is one of the best things that a buyer can do in the business sale process. Whether preparation proves a business deal worth it or uncovers red flags, it will be worth the effort.
A recent Divestopedia.com article entitled “Crazy M&A Myths You Need to Stop Believing Now” explores commonly-believed myths about the business transaction process that can put a halt on a deal or result in a costly mistake. The top five M&A myths are outlined below:
- The Negotiating is Over Once You Sign the LOI
- You Have to Take Seller Paper
- Everyone that Makes an Offer Has the Money to Follow Through
- I Don’t Need a Deal Team to Help Me Sell My Business
- You Have to Sell 100% of the Business
These commonly believed myths can lead a buyer or seller down a rabbit hole, but if recognized and understood early on, a buyer or seller can avoid any potential negatives that come with believing them.
A recent article posted on Divestopedia.com entitled “Preventative Valuations: How Doing a Valuation Early Impacts Your Sale Price” explores the experiences of John Carvalho, the founder of Stone Oak Capital, a middle market M&A advisory firm. He speaks on the importance of completing a business valuation early-on in the business transaction process and how this allows a seller to better prepare for a sale later on.
Deal structure, finding buyers, financing, and more are covered in this interview. Click to listen to the podcast or read a transcript of the conversation.