Most business owners picture themselves exiting their business at some sort of peak. While it may be preferable to sell your business when it’s thriving, this may not be possible. If you find yourself with a struggling business, your options might be limited. Bankruptcy might seem like your only option, but what if you could sell your distressed business instead?

Comprehensive Due Diligence

To sell your business, it is essential that you have a thorough understanding of its current state. Closely analyze financial statements, operational processes, and any potential liabilities. The better you understand your business, the better you can mitigate potential risks and find opportunities to raise your business valuation prior to sale.

Adjust Expectations

Selling a distressed business is not the same process as selling a thriving company. It isn’t unheard of for the business owner to have a skewed perspective of their business’s status. Optimism is important, but realism is necessary. Try to disentangle your personal feelings about your company from your professional opinion. 

Targeted Marketing

You’ve done your due diligence. The rose-colored glasses are off. Now is the time to market your business for the strengths it has. Focus on the positives, highlight the particular assets that come with your company, and target your ideal potential buyer.

Be Transparent

While it is important to focus on the positives, you can’t ignore the negatives, either. Hoping the buyer doesn’t notice only creates the chance for your rapport to be damaged when they uncover hidden risks and liabilities.

Realistic Business Valuation

Selling a business isn’t the same as listing something on Facebook Marketplace. Overvaluing your business in the hopes that someone will purchase it for that price is more likely to turn away potential interested buyers. Setting a realistic price based on your business valuation may create an environment where you have multiple offers over the asking price.

Flexibility During Negotiation

As we’ve previously discussed, selling a distressed business is vastly different than selling a successful one. It’s critical to be flexible during negotiations. Fighting for your ideal sale price too hard can cause the deal to stall completely.

Work with Professional Advisors

Selling a struggling business is no easy feat, but it’s far from impossible. The best thing you can do for yourself and your business is hire a professional team of M&A, financial, and legal advisors to guide you through your mergers and acquisitions journey. 

Stony Hill Advisors is here to help you sell your business, no matter what state it is in. Let’s work together.