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I have worked with almost 100 people that sold businesses. Here is what I have learned.

Almost all professional business acquirers do this strategy. There is a due diligence clause that they can use to lower the price. And here is how they use this clause. The closing is on an afternoon on Friday (yes, almost always a Friday). And here is what happens. At noon on Friday the buyers drops the price. They tell you they have come across something that says the price is now 20-30% lower. They bank on the owner having emotionally sold. They bank on the owner having made plans to celebrate on the weekend. The champagne is on ice. And they cannot emotionally walk away. To fight this the seller needs to stay emotionally ready to walk. That is the power the seller has.

The second thing that I have seen. Selling a business is a slow process and the closer it gets to the closing of the sale the more the owner gets tempted to stop investing in the business. Stop growing it. They can mentally and emotionally check out. That is a dangerous thing to do. Especially if a sale falls through. Then they have to get the momentum going again.

The last thing. Most sellers do not actually know what their business is worth. If I was selling a business I would invest in hiring someone to handle the negotiation. But again, that is just me. Not sure if I would stick my head into that hornets nest.

So, if I was going to give the seller advice. It would be this. Run the business like you are owning it for the next 20 years. It is not sold until the cheque is cashed. You give the buyer power when you emotionally, in your mind, sell the business. As a seller, your power is the willingness to walk away from the sale.

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- Stephen Semple

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