Selling your business is a big step. Maybe you’ve been working on it for years, or maybe the idea has only recently crossed your mind. Either way, you’ll likely only get one chance to get it right. And that’s exactly why it’s so important to know what mistakes entrepreneurs often make during this process.
From unrealistic valuations to ignoring legal risks—some mistakes may seem minor, but they can have major consequences. In this blog post, I’ll walk you through the most common mistakes made when selling a business, step by step, so that you’ll be fully prepared when you sit down at the negotiating table.
1. Overestimating Your Company's Value
“My business is worth millions.” Many entrepreneurs think this—and sometimes it’s true. But often, the value is based on emotion, not market logic. And that scares off buyers.
Why this goes wrong:
- The entrepreneur uses revenue (EBITDA) rather than profit as a starting point.
- Risks, dependence on the entrepreneur, and market developments are not taken into account.
- Industry multiples or comparable transactions were not analyzed.
What this means:
You run the risk of asking for an unrealistically high price. Potential buyers will back out or negotiate hard to get the price down. This leads to frustration, delays, and sometimes even the sale falling through.
What you *should* do:
- Have an objective valuation performed by an acquisition advisor or a certified appraiser.
- Think in terms of EBITDA and the multiples that are typical in your industry.
- Take future growth and risks into account.
2. Starting preparations too late
A business transfer doesn't begin when you sign a purchase agreement. It starts with preparation. And that process is often underestimated.
Why this goes wrong:
- Entrepreneurs wait until they're really ready to sell, without putting a structure in place beforehand.
- The paperwork is not in order; legal documents are incomplete or out of date.
- No succession plan has been put in place, and the business is too dependent on the owner.
What this means:
As soon as a buyer conducts due diligence, these shortcomings come to light. This leads to risks, changes to the deal, or a lower valuation. Sometimes the buyer walks away.
What you *should* do:
- Start 1 to 2 years before the desired sale date.
- Make sure your financial statements, customer contracts, employment agreements, and other crucial documents are in order.
- Take a critical look at your organization: Would the company still run smoothly without you?
3. No clear picture of the right buyer
A common mistake: thinking that any buyer who makes a good offer is automatically the right buyer. But it’s rarely that simple.
Why this goes wrong:
- The entrepreneur focuses solely on the selling price and not on the buyer's strategic fit or vision for the future.
- Insufficient background checks are conducted on the buyer.
- Expectations regarding post-sale collaboration were not discussed.
What this means:
In the long run, the deal could lead to disappointment—for you, your staff, or your customers. Consider changes in strategy, layoffs, or damage to your reputation.
What you *should* do:
- Create a profile of your ideal buyer: financial, strategic, MBI?
- Discuss their plans for the organization following the acquisition in advance.
- Have an advisor make a preliminary selection and screen the buyer.
4. Being unprepared for the due diligence review
Due diligence is the buyer’s opportunity to review the details. This is when they determine whether the information you have provided is accurate and whether there are any risks.
Why this goes wrong:
- The paperwork is incomplete or sloppy.
- Legal contracts are outdated or have not been properly documented.
- There is insufficient understanding of tax and operational risks.
What this means:
A buyer may question your transparency or encounter unpleasant surprises that drive down the deal value or lead to its cancellation.
What you *should* do:
- Have a “vendor due diligence” conducted before you begin negotiations with buyers.
- Make sure all financial, legal, and tax documents are up to date.
- Don't hide anything: openness builds trust.
5. Making Emotional Decisions
You've built your business with heart and soul. It's only natural that it's hard to let go. But emotions are a poor guide during negotiations.
Why this goes wrong:
- The business owner wants to continue making all the decisions himself, even after the sale.
- Unrealistic conditions are being imposed, purely out of emotional attachment.
- There is a fear of “letting down” staff or customers.
What this means:
This could scare buyers away or lead you into an awkward deal that leaves you feeling trapped later on. The working relationship after the transfer may also be strained.
What you *should* do:
- Be honest about your emotional involvement.
- Let an independent advisor guide you and help you focus on what really matters.
- Focus on the bigger picture: continuity, value, and peace of mind.
6. Wanting to do everything on your own (without guidance)
Selling a business is no routine task. It involves legal, tax, commercial, and psychological considerations. Yet many entrepreneurs try to “handle it themselves.”
Why this goes wrong:
- Important legal provisions are being misinterpreted.
- The tax structure is not optimal and results in high tax bills after the fact.
- The negotiation is either too businesslike or, on the contrary, too emotional.
What this means:
You're taking a financial risk, losing bargaining power, and may make mistakes that end up costing you a lot of money.
What you *should* do:
- Put together a professional sales team: an advisor, a lawyer, and a tax specialist.
- Make sure they have experience with business transfers in your industry.
- Stay involved in the process, but focus on substantive decisions—leave the technical details to the experts.
Frequently Asked Questions (FAQ)
Q: When should I start preparing for a sale?
A: Ideally, 1.5 to 2 years in advance. That way, you’ll have time to make improvements and minimize risks.
Q: How can I avoid getting too emotionally involved?
A: By bringing in an outside advisor who can look at the situation rationally and help you make the right decisions.
Q: What if I don't have a buyer yet?
A: No problem. A good advisor will help you find and screen suitable buyers who align with your goals.
