Seller mistakes to avoid when selling your business

Selling a business is a high-stakes transaction - legally, financially, and emotionally. Unfortunately, many entrepreneurs and small business owners make avoidable legal mistakes that can reduce the purchase price, create future liabilities, or in the worst case, derail the entire deal. Here are the most common mistakes:

Inadequate Legal Preparation for the Sale

A fundamental mistake is failing to dedicate sufficient time and focus to legal preparation. This often results in a range of structural deficiencies that a buyer will identify – potentially leading to a reduced valuation or even scaring them off entirely. Key consequences of poor preparation include:

• Unclear ownership and financing structure

• Unclear title and protection of intellectual property

• Incomplete or poorly drafted contracts

• Difficulty supporting the company’s valuation

Other Common Mistakes – That Can Be Costly for the Seller

1. Granting a long exclusivity period to a single buyer via a term sheet, which shifts negotiating power in favour of the buyer.

2. Failing to secure proper employment and consultancy agreements, including clear IP transfer provisions, which increases legal exposure and weakens your negotiating position.

3. Using template contracts from the internet for customer and supplier agreements, which are not tailored to your business. This can create unnecessary risk and make the company less attractive to buyers.

   
   

   For a full list of the most common seller mistakes and how to avoid them check out this in-depth article.