When the owner of an accounting or physical therapy practice decides to sell their business, they may consider doing it themselves, without the assistance of a broker. Although this approach might help you avoid paying an expert’s fees, it carries immense risks.
Selling your practice requires careful planning, detailed execution, and strategic decision-making. Stepping into this process without professional guidance often leads to unexpected complications, undervalued offers, and lost opportunities. Read on to learn about seven common mistakes when selling a business without a broker, so you can better understand why their guidance is so important.
One error that owners often make is mispricing their practices. Their emotional investment in the enterprise can cloud objective judgment, causing some to overvalue their operation significantly. Meanwhile, others may worry about attracting buyers and undervalue their business, which can also negatively impact their profitability.
Pricing a business involves more than referencing financial statements. Buyers consider market trends, industry comparables, and intangible factors such as brand reputation and customer loyalty. Without access to market research and expert insights, many sellers land on figures that leave their business undervalued.
Brokers specialize in balancing comparable data, financial projections, and unique industry factors to determine an accurate valuation. Without these tools and analytical expertise, achieving a fair and lucrative sale agreement may prove to be difficult.
Another mistake that people make when selling a business without a broker is that they limit their buyer reach. Without a broker, sellers have access to only a limited range of potential buyers. They may inadvertently exclude those who are qualified to pursue a transaction.
In contrast, brokers engage with a curated pool of vetted investors who understand market norms and possess the financial qualifications necessary to close deals. Brokers also employ marketing strategies tailored to attract serious buyers. Without professional assistance, owners often miss out on opportunities for multiple offers that could drive a higher value and facilitate smoother negotiations.
Sellers may also make the mistake of failing to prepare themselves for buyers’ questions. Buyers are typically thorough in their due diligence because they’re seeking to minimize risk and ensure the business aligns with their expectations.
Questions about financial performance, operational processes, customer retention, or growth strategies require specific, well-documented answers. However, if a seller does not have accurate and up-to-date information, they may appear disorganized or unreliable. This can lead to hesitation or distrust from prospective buyers.
A broker will ensure that you have the necessary insights and documentation, improving the likelihood of a favorable outcome.
Without the guidance of a broker, sellers can also underestimate the complexity of negotiations in a business sale. This may result in them prioritizing upfront offer amounts while overlooking critical terms such as contingencies, post-sale obligations, or adjustments tied to future performance.
This myopic approach can lead to agreements that appear favorable initially but ultimately fail to maximize the deal’s potential value. Negotiation is not purely about securing the highest price but also about structuring a deal that balances risk, cash flow, and long-term benefits.
Additionally, sellers may fail to prepare properly for negotiations. Buyers often come armed with well-crafted strategies, while sellers may enter negotiations without a comprehensive understanding of their business’s valuation or fail to anticipate counter offers and deal structuring tactics.
This mismatch can lead to missed opportunities or poorly negotiated agreements that fail to align with the seller’s financial or personal goals. Engaging brokers is critical to leveling the playing field and ensuring sellers achieve the outcomes they deserve.
Preparing a business for sale requires a significant amount of time and attention. When owners undertake the process without the help of a broker, they can become so focused on negotiations, proper documentation, or buyer vetting that they let their operations falter during this process. The business’s performance after listing carries considerable weight in determining the final sale price.
If your practice experiences a dip in revenue or an exodus of employees, it may lead buyers to underestimate the enterprise’s value or question its stability. However, with the help of a broker, you can maintain your organization’s momentum leading up to and during the sale process. They can shoulder the technical and logistical aspects of a sale, allowing you to maintain your focus on running your operations effectively. Owners who attempt to juggle these responsibilities independently risk jeopardizing both their practice’s success and their negotiating position.
Transparency is vital when selling a business, but full disclosure at every stage of the process can lead to challenges. Sharing detailed financial records, customer lists, or trade secrets too early risks misuse by uninterested buyers or competitors in disguise. Oversharing also enables potential buyers to leverage sensitive information to their advantage in negotiations or future dealings.
Experienced brokers can assist you by taking steps to protect key information until a buyer officially commits to the purchase. Without this layer of professional foresight, owners place their business at risk of losing proprietary data or losing value due to premature disclosure.
Finding the right buyer extends beyond identifying someone capable of making the purchase. Certain buyers lack operational or industry expertise, posing a threat to a business’s legacy and long-term success. If sellers don’t enlist the help of a broker, they may struggle to evaluate the qualifications, motivations, and ethical standards of potential buyers without the network or vetting methods that brokers use.
A good broker understands specific industries, maintains connections with buyers who exhibit both financial stability and operational prowess, and engages prequalified prospects, improving the likelihood of a smooth transition and sustained success post-sale. Without brokers, sellers often rely on incomplete evaluations, which can lead to complications, missed opportunities, and unfavorable outcomes.
Trusting a broker to sell your business protects you and helps create the foundation for a rewarding future beyond the sale. If you need the help of a skilled broker to assist you in this process, contact Private Practice Transitions today. Let us help you find the right buyer who will take your business to new heights.