The Risks You Don’t See Until You Try to Sell
The Risks You Don’t See Until You Try to Sell
A business owner had run his company for 25 years. Revenue was $15 million. Profits were steady. He decided it was time to sell and called a broker.
The broker reviewed his financials and said, “This looks good. Let’s go to market.”
Six months later, after multiple buyer visits and a failed letter of intent, the owner discovered risks he never knew existed.
“I thought my business was worth $8 million,” he told a friend. “Buyers saw risks I had no idea were there. One offer came in at $4 million. I almost took it out of frustration.”
The Hidden Risks
Most sellers are blind to their own risks because they have learned to work around them. Buyers see them immediately. The owner in our story had no idea that his business had vulnerabilities until a buyer pointed them out.
None of these issues affected daily operations. The business ran fine. But to a buyer, each one was a red flag. The buyer reduced their offer significantly, and the owner was left scrambling.
The lesson for sellers: Your business is only as valuable as its transferability. If you cannot prove that it will run without you, buyers will discount the price or walk away. The risks you do not see are the ones that will cost you the most.
The Cost of Hidden Risks
The owner eventually hired an advisor to help him understand what the buyer had seen. He learned that there were gaps in his business that he had never considered. Over the next 12 months, he addressed them.
When he went back to market, he received offers close to his original expectation. The delay cost him a year of his life. But the alternative – selling at the low offer – would have cost him millions.
Uncover your hidden risks before a buyer does.
The Business Transition Risk Diagnostic identifies the gaps you cannot see. Do not wait for a buyer to point them out.