Owners May Still Have Unrealistic Expectations about the Value of Their Businesses

Owners May Still Have Unrealistic Expectations about the Value of Their Businesses

Executive Services Firm Tatum Cites Top 5 Mistakes Made by CEOs and CFOs in Selling Businesses

Selling a business in today’s slightly improving business climate still is no easy task, and unrealistic expectations about the value of business can make it that much harder for the seller, according to a monthly survey of top partners of Tatum, the nation’s largest executive services firm.

In fact, not realizing the true market value of their companies is the number one mistake business owners are making today, according to Tatum.

“We are starting to see an uptick in acquisitions, but the pre-downturn rules have significantly changed,” said Karen Macleod, president of Tatum.

“Tatum is advising CEOs and CFOs that they must do their homework. Seller due diligence is a critical first step in preparing to take their companies to sale. It takes more preparation to close a deal than it did three years ago,” noted Macleod. “Often sellers do not have a realistic understanding of the value of intangibles and haven’t done market comparisons to understand the buyer’s perspective.”

Other mistakes sellers should avoid, as identified by the Tatum survey include:

• Inadequate preparation for the sales process, including assessing value and being ready to provide the level of financial and operational information the prospective buyer will need to see.
• Not focusing on day-to-day operations while negotiating the sale – performance erosion during the transaction process will have an immediate impact on negotiations.
• Underestimating how long the sales process will take – it may take two years to accomplish an “exit strategy,” especially in today’s marketplace.
• Not getting advice early enough in the process – experienced advisors can accelerate the process and help a seller get a better selling price.

“Yes, it will be tough to sell your business,” says Macleod. “Given the right preparation and focus, it can create new value for those owners who have realistic expectations and the willingness to do the requisite heavy lifting up front.”

The Tatum survey polled 167 respondents of whom 81% were CEOs, CFOs, COOs or other senior executives and 19% were VP/Controllers or advisors.

About Tatum

Tatum is the nation's largest executive services firm, with 37 offices nationwide. Tatum helps top executives in the C-suite resolve strategic, financial and technology challenges, with particular focus on supporting the Office of the CFO. For more information, visit www.tatumllc.com. Tatum is a division of SFN Group, Inc. SFN operates a family of specialty businesses providing strategic workforce solutions in professional services and general staffing.

Tatum
Adelle Erdman, 404-880-1314
Adelle.Erdman@TatumLLC.com
or
Amy Grossman, 215-493-1045