THE TOP 3 PITFALLS ON THE WAY TO SELLING YOUR COMPANY

Selling your own company should be the culmination of years of work, yet this process often turns into a disillusioning experience rather than a triumphant event. For example, the projected sale price for retirement may fall short of expectations, or a buyer’s promises may go unfulfilled. Entrepreneurs risk overlooking common pitfalls that are entirely avoidable. Below, we explore the three most frequent traps.

First, insufficient preparation. A recurring error in the sales process is incomplete or unstructured financial documentation. In company sales, transparency is essential to capture the full complexity of the business and, based on past performance, develop forecasts for the future. Poor preparation can deter potential investors or lead to price markdowns and deferred portions of the purchase price payment. Although earn-outs themselves are not inherently negative, sellers who typically exit after three years usually have no control over deferred payments.

Second, misjudging the company’s market value. Accurately valuing a business is critical to a successful sale. Owners of small and medium-sized enterprises often overestimate their life’s work due to emotional attachment—built over years or decades, the company becomes part of their identity. This emotional bias can lead to overvaluation, which sends a red flag to potential investors and may prevent even an initial review or discussion, significantly prolonging the process. At the same time, the seller’s advancing age increases time pressure. The sales process drags on, negotiating positions weaken, and a sale below fair value often results. To avoid this scenario, we recommend an early, professional valuation conducted by independent experts to establish realistic price expectations and pave the way for a successful sale.

Third, neglecting succession planning. Entrepreneurs are often so involved in day-to-day operations that the business depends heavily on them personally. This reliance diminishes attractiveness to potential buyers—especially when clear structures, documented processes, or a capable second-tier leadership team are absent. Investors demand continuity without the current owner; lack of documented workflows, role descriptions, or knowledge transfer (e.g., via SOPs) leads to price discounts due to increased risk. For a successful sale, it is therefore vital to work early on building a robust second management layer and clear succession scenarios.