1.Dive in unprepared.
- Making an offer before you understand the business and structure of the seller.
- Making an offer before you have undertaken proper due diligence.
- Not seeking professional advisors before you intend to enter a transaction.
2. Appoint the wrong advisors or appoint the right ones too late.
- Business broker / corporate advisor
3. Fail to address tax and structuring issues from the outset.
- Stamp duty
- Risks for buyer and seller entities
- Guarantees / warranties
- Limit of liability
4. Forget about working capital.
- Commonly misunderstood. Most share sales have a working capital adjustment and a level of cash and receivables are left in the business.
- In an asset sale, parties often reach agreement, but working capital is not addressed. When a buyer realises he needs another $500,000 to operate the business, the deal may fall over.
5. Jump to formal agreements when a term sheet might save time and money by ensuring parties are on the same page on key issues before diving into the detail.
6. Understand whether you can get along with the seller or buyer post settlement.
7. Fail to consider vendor finance and appropriate securities (and if seller is the ‘bank’ and you are working with them it can be uncomfortable).
8. Announce a sale too early
- To Staff
- To Suppliers
- To the Market
9. Ask due diligence questions too late and then ask for adjustments.
10. Competitor paranoia complex. Over thinking/assuming the buyer is just looking under your hood. ...