The Importance of Keeping Emotions in Check When Selling a Business

If you thinking of selling business, it is absolutely critical that you check your emotions before you embark on the sale process. Many times a small business owner will believe that they won’t get caught up in the heat of the process and just as often an experienced business broker will see that even the coolest of owners can get worked up. This article is a summary of some of the issues a small business owner can get carried away in the sales process.

Time during a business sale when a seller can get emotional…

When listing the business for sale
When you finally decide to sell and contact a reputable business brokerage to assist, it is important to stay rational. Too many time, a company owner looking to sell will have unrealistic expectations about the time it takes to sell a business and especially the listing price. Setting the price of the business too high will may not only result in an unsold company but possible very few phone enquiries also. When you work with a business broker or business valuator on setting a list price, don’t take offence at what you hear. Entrepreneurs are very often emotionally tied to their ventures so hearing a low pricing opinion can be seen as a slight – but it shouldn’t be.

When receiving an offer to purchase the business
When the first offer comes in (especially if it is a real lowball offer) a business seller may get worked up if the price is not close to their expectations. After all, a small business owner can spend years of personal hard work into building up an organization and a low offer may seem insulting. It is important not to take anything personally during a negotiation. Try your best to stay detached and heed the advice of your business broker.

During due diligence
After there is a letter of intent (LOI) or conditional purchase agreement in place, a business sale usually enters the due diligence phase. This is when a buyer scrutinizes the financials and operations of the business being sold. A business owner may feel that their word may not be taken as honest if everything they have put forth is now subject to scrutiny and verification. Again, don’t take this personally. In a business sale transaction almost everything is verified and nothing is personal.

Just before the closing date
Many times, a business owner will get cold feet just before the business transaction is set to close. This is called seller’s remorse. Selling a business is a long process but for the owner that has poured his heart into the venture, it certainly can be painful to depart from the company. Try your best to stay rational during this final part of the transaction. Remember the reasons that you listed the business for sale in the first place. If you decide not to follow through with the sale at this stage, you may very well regret it.