“Not every business will sell and a significant number never make it to market because professional, ethical advisors won’t take on an engagement with little-to-no chance of success. The Q1 2019 Market Pulse Survey reveals that, on average, advisors decline about 70% of the business opportunities that come their way because the business is considered “non-saleable.”
There are any number of reasons we might decline to take a business to market,” said Lisa Riley, principal of LINK Business-Phoenix. “Unrealistic expectations, meaning sellers place too high a value on their business, is typically the number one deal killer. Declining sales trends, dated business practices, over-reliance on the owner, and significant customer concentration issues can all impact your ability to sell.”
“As advisors, it’s our obligation to tell people what they need to hear, not what they want to hear,” said Scott Bushkie, managing partner of Cornerstone Business Services. “The further ahead you plan, the more we can help you overcome certain issues that would be red flags for buyers. But when business owners hang on too long, or come to the table burned out, then we might have to start talking about a distressed business sale or no sale at all.”
Even when advisors do accept a business engagement, nearly half of those engagements will terminate before a successful closing. This finding has been relatively consistent across the survey’s seven-year history. “Deals fall through when offers come in below expectations, when buyers and sellers can’t agree on terms, and-a lot of times-because one party or the other got cold feet,” Riley continued. “You’ll hear it in our industry again and again: ‘Time kills all deals
.’ You need to come to market with well-organized records, realistic expectations, and a committed team who will keep the process moving forward. Anything less can lead to disappointment and ultimately hurt your ability to sell at all.”
At the same time, most Main Street advisors report turning away anywhere from 1 to 10 would-be buyers or potential suitors, per engagement, because they are not qualified for the opportunities they pursue. Notably, 7% of advisors said they get more than 25 unqualified inquiries per engagement. “Vetting buyers is a big part of what we do. It’s just one of the ways we protect your confidentiality and how we keep the sale process from becoming a distraction to owners running their businesses,” continued Bushkie. “Your advisors are there to make sure that no one gets your business information, or takes up your time, unless they are financially capable and sincerely motivated to make an acquisition.