Is Your Business Boring Enough to Sell?
If you’re a business owner who may one day sell your company — whether in 1 year or 10 — understanding what buyers value can make a huge difference in your outcome.
You probably wouldn't appreciate if someone called your business "boring." And if you're in discussions with a potential buyer, you might like it even less.
But a "boring" business might be very attractive to buyers.
The Appeal of “Boring”
Ok, we're having a little fun with this. Of course every business owner wants to be able to show strong growth, solid cash flow, new customer wins, new products and services — EXCITING things. And yes, buyers want to see all those EXCITING things.
But what buyers don’t like is surprises — especially negative surprises. When a business is boring – predictable, transparent, and free of surprises – it’s easier for the buyer to understand and quantify the risks associated with the business. That means a smoother due diligence and transition process, which could also mean there’s less leakage in the purchase price between the early and later stages of the process.
Why Surprises Can Kill Deals
What we’re talking about here is managing things that a buyer is likely going to find in due diligence — and when they do find it, it's going to cause them to think twice. Negative surprises can lead to:
• Reduction in purchase price
• Concessions from the seller or guarantees
• Additional scrutiny in other business areas, and/or
• The buyer walking away from the deal entirely.
None of these are good outcomes for you, the seller.
Common Negative Surprises to Watch For
Negative surprises often catch even the seller off guard, which is why it’s important to plan and prepare well before it’s time to sell. Some common negative surprises?
• Legal (such as pending or threatened litigation)
• Personnel (such as workers' compensation issues, harassment claims, among MANY others)
• Insurance issues
• Cybersecurity
• Taxes
• Regulatory issues
The Boring Stuff Matters
This is VERY far from a comprehensive list, but I think you're getting the point. None of this is directly related to sales growth, customer satisfaction, market dynamics, the core product or service — it’s all BORING, back-office type stuff. It doesn’t DRIVE results, but it absolutely CAN impact them.
And even though it’s BORING, it doesn’t mean buyers will look past it – because the boring stuff isn’t boring when you’re dealing with lawyers, courts, lenders and investors to deal with these issues. Issues in these areas may even be preventable – or if not, steps may be available to reduce the risk, lower the cost of a bad outcome.
The key to a boring business, one that buyers can truly understand and get comfortable with and ultimately finance and purchase, is that all the surprises are right out in the open. The seller has a solid understanding of the issue(s), is either taking action or has a plan to address the issue(s), has brought the issue(s) out into the daylight, and communicates openly and transparently with the buyer about them.
You may not be able to fix every issue completely — and that’s okay. What matters is that:
• You know the issue exists
• You don’t try to hide it
• You have a plan to address it
• You communicate openly with buyers about it
That transparency builds buyer confidence, helps protect your valuation, and keeps deals moving.