If you’re thinking of expanding your company into a new market, or you want a streamlined way to achieve growth goals, you may consider a business acquisition. The process of acquiring another business or its assets is much easier when you have accurate information. Consider several common misconceptions from both the buyer’s and seller’s points of view.

Myth: Business Acquisitions Are Simple Matters

There are often more details involved in the acquisition process than either business truly expects. The seller may think it’s a question of just putting a price tag on the business or certain assets, but that’s just the tip of the iceberg. Negotiations can be fairly complex even for seemingly simple business purchases, mainly because both sizes are investing a considerable amount of time and money in the process.

Sellers usually believe that their company or brand name is worth more than what buyers offer. This is often tied to the hard work, dedication, and time that owners have invested. Unfortunately, while finding the market value of equipment and real estate is relatively straightforward, the value of a company or brand is more difficult to pin down. It’s subjective and highly dependent on the size of the local market and the amount of competition present.

Myth: Sellers Don’t Need to Invest Anything During a Business Acquisition

While buyers take on the majority of the legwork in performing due diligence, sellers may be surprised by the amount of time and money required to navigate the acquisition process. This is related to the significant number of business documents that must be provided. It’s common for sellers to need to set up a dedicated online data room that provides access to all financials for only certain members of the buyer’s team.

Gathering, organizing and managing these documents can require significant company resources. You may need to provide full financial statements, information about client contracts, proprietary processes, company records, employee details, and records about business assets. All of these records need to be covered by a comprehensive non-disclosure agreement vetted by an experienced lawyer.

Myth: You Don’t Need Financing If You’re Planning on Selling Your Business Soon

Every company needs financing to take care of its cash flow, credit score, business reputation, and revenue growth. Imagine that you have a classic automobile that you took the time to restore. Even though you know you’re going to sell it in the future, you would still take care of it right now. That way, when you sell, you get the best price.