10 - Falling Victim to a Lack of Confidentiality:
Once word gets out that the business is being sold; employees may question their future, customers may start checking out your competitors, and vendors may hold back on deals. The value of your business can drop quickly if you do not maintain confidentiality. There are several steps to take that make sure that doesn't happen.
9 - Not knowing the ropes:
As with anything you do, whether business or in life, there will be a learning curve when starting something new. Learn the nomenclature and what the selling process typically entails so that the deal is structured properly and you come out a winner.
8 - Not knowing where to find, and how to identify, the best and hungriest buyers:
Local buyers are great. They know the demand for your business within your area and are most likely looking to make a solid financial move. Unlike local buyers though, national buyers are normally making a strategic play; paying a higher dollar amount to expand or gain a foot-hold within your state or region; Often paying much more in order to do so. Finding the best offer through competitive bidding is much easier when there are qualified, larger strategic buyers in the game, not just local players. You obviously need to spend time on serious buyers only. When you sell your business you can only sell to ONE buyer.
7 - Not knowing how to value or even what is valuable within your company:
"What are the current multiples of E.B.I.T.D.A that my type of company is selling for right now…Or how about within the past few months? How much per bed? or since I have X in Medicare income can I get a multiple of revenue instead of just a multiple of earnings?....what are the current formulas and multiples being used to figure out the value of MY business....or any medical business for that matter?".
I would love to be able to share all of that here, in this article; the problem is that it's always changing. While the first and foremost value of companies in today’s environment are often valued by their profits there are quite a few other aspects of your company that could be worth far more or at minimum play a substantial role in it's true value: Income mix (Medicare/private), number of beds, number of patients, provider number, growth, property, customer base, contracts, C.O.N or not, State, and region and so on and so forth. The list goes on and is always evolving. Understanding the value of these and how they relate to your business significantly changes how much you will end up with in your pocket.
6 - Being unable to defend/substantiate your valuation:
You have worked for years to build value within your business. Now you've spent countless hours doing all of your homework and research to set a monetary value for that business; you must be prepared to defend and substantiate that value. Prepare all of the facts that you have to specifically defend that value vigorously.
5 - Waiting too long to sell:
If you are reading this, you most likely are looking into selling your business. Just like most multiple choice questions, in this case "to sell or not to sell', the "gut feeling" answer is most likely the right answer. Many business owners regret not selling at the most opportune time. By waiting, they encounter increased competition or an unfavorable change in; market conditions, taxes, or other governmental policies. If you are thinking of selling, pay attention to the "gut feeling" as to why and then take a look at all of the other factors. Defining the value of your business now is simple compared to predicting its value within the indefinite future.
4 - Thinking from your point of view instead of the buyer's point of view:
It is very common and natural to view most things, from how other people should act, to the opinions they should have, from our own perspective. This is due to our own unique life experiences and other factors. Unfortunately, if you fail to view the sale of your business from the BUYER'S perspective a lot of opportunity can be overlooked. What the buyer sees as valuable and what you see as valuable within your business- are often two different things. Considering a Buyer’s point of view also helps when looking at, trying to understand, and then negotiate acceptable terms.
3 - Not planning for the sale of your business:
You wouldn't sell your vehicle without a wash, a little vacuuming, and maybe even a wax, right?
There is often a mistaken idea that a business can be sold without any real "polishing". As a result the business is not, tweaked, improved, or optimized to produce the highest sale price. What can be done varies widely from business to business, but as we'll cover more in depth later, perhaps you should "look at it from the Buyer's perspective". That will help you figure out what might need a "new coat of wax"
2 - Not knowing the steps to selling your business:
What would the protocol be if I were to have a meeting with the queen of England? What steps, from entry to exit, would I take to make sure that I did everything right? I have NO idea! I've never met her before, nor have I ever received counsel from anyone about the subject. Sure, I’ve had thousands of meetings, just not one exactly like that.
With that said, it is very understandable why a business owner doesn't know the exact steps to selling their business. Most business owners will only experience that once or twice. Sure, they've sold valuable assets before, just not quite like the one they’re selling now. Unfortunately, not knowing the exact steps can leave you at a severe disadvantage and will cause a lot of money to be left at the table.
1 - Not utilizing the skills of professionals:
You should highly consider seeking out sound business advice, guidance, and assistance from professionals who have been involved with the sale of other similar medical businesses. You will sell a few businesses this lifetime, they will sell a few THIS MONTH. Whether it is valuation, defending valuation, or having a list of registered buyers; a good advisor/intermediary will be able to help. They will take away almost all of the headaches and bring buyers and experience to the table that would not have been there otherwise. Selling is a complicated process and not one that should be taken on without expert assistance.