Selling your business may be one of the most significant financial and emotional decisions you’ll ever make. Whether you’re retiring, pursuing a new venture, or merging with a strategic partner, the process of transitioning ownership is complex—and often underestimated.
At Koegle Law Group, we’ve advised countless business owners during mergers and acquisitions (M&A). Unfortunately, many come to us after they’ve signed a Letter of Intent (LOI), only to realize they’ve missed key steps that can dramatically impact the outcome of their deal.
In this blog, we break down three of the most overlooked (and most costly) mistakes business owners make when selling—and what you can do to avoid them.
1. Ignoring the Tax Consequences
One of the most critical—but frequently skipped—steps in preparing to sell is analyzing the tax implications of the transaction. The way your deal is structured (e.g., asset sale vs. stock sale) can make a significant difference in how much you walk away with after closing.
What to do instead:
- Bring in your CPA and financial planner before signing an LOI.
- Determine if an asset sale or stock sale is more tax-efficient for your specific situation.
- Model out tax scenarios to understand your true net proceeds.
Why it matters:
Proper tax planning upfront allows you to enter the deal with eyes wide open and avoid surprises that could erode your profits or delay the sale.
2. Overlooking “Enterprise Intelligence”
Enterprise intelligence is the valuable operational knowledge you possess as the owner—everything from vendor relationships and client preferences to what’s worked and what hasn’t in your business.
Ask yourself:
- Who else in your business holds this knowledge?
- Can your business run smoothly without you?
- Are your systems and processes well documented?
What you need:
- A knowledge transfer plan that includes key staff, documented SOPs, and strategic handoff meetings.
- Cross-training within departments to reduce dependency on you, the owner.
Why it matters:
Buyers will assess whether your company can survive—and thrive—without you. If your business only runs because you do, its valuation and desirability will take a hit.
3. Failing to Plan a Realistic Transition Timeline
Gone are the days when buyers expected sellers to stick around for 3–5 years post-sale. Today’s buyers want nimble transitions—sometimes as short as 6–18 months.
Modern transition planning involves:
- Identifying and mentoring future leaders within your business years in advance.
- Delegating key responsibilities before you enter negotiations.
- Establishing a clear succession plan.
Why it matters:
If your company relies on you as the “cook, maitre d’, and dishwasher,” buyers may worry about the business falling apart when you leave. The more self-sufficient your organization is, the stronger your negotiating position will be.
Planning to Sell? Start Years in Advance.
Too often, business owners start planning their exit 3–6 months before they want to sell. That’s not enough time.
To set yourself up for a successful sale, begin preparations 2–5 years in advance. This gives you time to clean up your books, solidify your team, transfer knowledge, and implement systems that demonstrate value.
How Koegle Law Group Can Help
Our firm specializes in employment law and business transitions, helping owners like you:
- Prepare your business for sale with legal and operational readiness
- Structure your deal to minimize risk and maximize value
- Craft buy-sell agreements and transition plans that work for both parties
Whether you’re 6 months or 6 years from selling, we can guide you through the process with foresight, strategy, and protection.
📞 Contact us today to schedule a confidential consultation.
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