Buying or Selling a Business: Mistakes to Avoid

​It is said with every major purchase there's some kind of remorse either on the part of the buyer or the seller. This can be especially true when buying or selling a business. No matter which side of the negotiating table you sit on, there are some critical areas that could leave you with feelings of regret. Avoid these mistakes and you'll feel better about your deals after they're done.

SELLER MISTAKES		BUYER MISTAKES
Not researching the value of similar businesses within the industry Overestimating the value of the company and losing a well-qualified buyer Insisting on cash-only terms	Selling Price	Overpaying based on emotion Stretching personal resources too thin
Maintaining sloppy financial records that potential buyers cannot trust	Accounting Records	Relying on company financials not prepared by a third-party accounting professional Not requesting payroll returns and other tax filings in the financial review
Agreeing to seller-financing without proper vetting of the buyer's creditworthiness	Financing	Settling for a high-interest loan, or one with too short a maturity
Selling the assets of the business when it would have been more tax-efficient to sell the corporate shares instead	Assets	Purchasing less than all of the assets used in the business, overlooking items such as licenses, patents or important contractual arrangements Making a stock-purchase transaction without understanding the benefits of an asset purchase
Neglecting to check the background of the buyer and assessing their ability to run a business Failing to verify the buyer's liquid assets	Due Diligence	Not asking why the business is for sale Conducting too little research into the competition or overall industry trends Not searching for the existence of company loans and other liabilities
Signing a non-compete agreement that is too restrictive in scope or timeframe	Non-Compete	Failing to require a non-compete clause from the seller, especially in a service-industry business
Leaving too much of the sale price dependent on the ongoing success of the company	Transaction	Having unclear expectations for seller participation in the business after the sale
Not positioning the business to sell well in advance of the first offer Requesting professional help too late in the sales process	Expert Help	Not assembling a team of legal, tax, and insurance experts before agreeing to terms