10 Mistakes Commonly Made When Selling a Company

Introduction

Selling a business is a once-in-a-lifetime decision. Many owners, however, are not prepared for the complexity of the process, and as a result, they often make serious mistakes. The most typical of these is overvaluing the company, but there are many other pitfalls that can lead to financial losses worth millions.

In this article, we present the 10 most common mistakes in company sales, and how company sale side advisory can help you realistically price your business and sell it successfully.

👉 If you haven't read it yet: Steps of M&A Advisory in Hungary

1. Overvaluing the Company

Most business owners value their companies far higher than what the market is actually willing to pay. This is understandable, as years of work, sacrifices, and emotions are tied to it. It is common for owners to base their expectations on peak historical results or ignore average industry EV/EBITDA multiples.

👉 Solution: A professional, independent business valuation. This places negotiations on objective grounds and sets a realistic price that leads to a faster and more successful transaction.

2. Incomplete Financial Documentation

Even the best company cannot be sold if accounting is disorganized, contracts are incomplete, or financial statements are not up to date. Buyers quickly lose trust and either walk away or significantly reduce their offer.

👉 Solution: Organize balance sheets, cash-flow statements, and contracts before the sale. A professional advisor can help prepare the company for a due diligence process.

3. Emotion-Driven Decisions

A business often feels like the owner's "child." This can lead to emotional attachment, resulting in unrealistic pricing or pulling out of negotiations at the wrong moment.

👉 Solution: Entrust negotiations to an expert who objectively represents your interests and prevents emotions from overruling rational business decisions.

4. Poor Timing

The market environment, economic cycle, and the company's current performance strongly influence the price. If the owner tries to sell the company at an inflated price at the wrong time, it may lead to prolonged negotiations or failed transactions.

👉 Solution: Develop an appropriate exit strategy that takes economic trends and the company's growth potential into account.

5. Lack of Confidentiality

If employees, clients, or competitors learn about the sale too early, it can create significant trust and operational problems. This can also damage the company's value.

👉 Solution: Use confidentiality agreements (NDAs) and handle the process discreetly.

6. Relying on a Single Buyer

Many owners feel that once they find a serious buyer, the work is done. But relying on only one buyer is extremely risky: if the deal falls through, restarting the sale process can delay everything by months.

👉 Solution: Always create a broader buyer pool to foster competition. This strengthens your negotiating position and can result in a higher price.

7. Inexperienced Negotiations

M&A negotiations follow specific rules. An inexperienced seller often clings to unrealistic conditions, which may cause them to lose serious buyers.

👉 Solution: Involve an expert who understands negotiation strategies and can represent your interests in line with the company's realistic market position.

8. Ignoring Tax and Legal Considerations

Many owners focus only on the price and forget about tax and legal implications. A poorly planned transaction structure or incomplete contracts may later cause significant losses.

👉 Solution: Involve tax and legal advisors from the start. A good business exit advisory team works with an integrated network of experts.

9. Rushed Buyer Selection

A high price is tempting, but not every buyer is suitable. If financing is uncertain or the buyer has no long-term strategy, this can lead to serious issues later.

👉 Solution: Carefully assess the buyer's background, financing options, and professional experience. A skilled advisor helps filter out unreliable prospects.

10. Lack of Professional Advisory

The biggest mistake you can make is starting the process without professional support. Many owners think they are saving money on advisory fees, but in reality, they end up with much higher losses.

👉 Solution: Choose an experienced M&A advisor who supports you through the entire process: valuation, building a buyer pool, negotiations, and contract signing.

Conclusion

Among the most common mistakes in selling a company, overvaluation is number one. But poor timing, lack of confidentiality, or inexperienced negotiations can be just as harmful. All of these can lead to serious financial losses for the owner.

If you want to avoid these mistakes and sell your business under the best possible terms, seek professional support.

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