Why 75% Of Businesses Never Sell

Most businesses never sell. 75%, that are placed on the market for sale, never make it to a closing. Does this seem like a lot to you? When I first became a broker, I wondered: why do businesses never sell?! Now after sitting through numerous meetings with both buyers and sellers, I can confirm the statistic is absolutely true. Why? If a business owner has made the decision to sell and gone to the extent of working with a broker to get the profile drawn up and posted ready for buyers to see, then why would their businesses never sell? What goes wrong? The marketplace is always flooded with buyers, so why isn’t that statistic flipped the other way, where only 25% never sell? The answer is simple: seller emotions!

The emotions invariably always show up on the sell side. Some of the basic human emotions like fear and pride come quickly into play. Put simply, at some point in the process, the seller gets cold feet or uncomfortable as the inevitable conclusion draws near to the final hour. I think you will get the idea of what I mean if I share some typical comments that we regularly hear from sellers:

• “I’m not going to let just anybody come in here and mess up what I have built!”
• “I have put a lot of work into this place and it is worth way more than that!”
• “Who is going to look after my employees when I am gone?”
• “This is all I know and I don’t know what I am going to do now!”
• “There is no one else that can run this place like me!”

These seller comments are all too often the “norm.” The result is they believe they are irreplaceable, want more than their company is actually worth, fearful that it will all collapse and their employees will all be on the street the day after closing. Nothing could be further from the truth. Yet, these seller emotions and reactions are real and must be dealt with. The seller may know in his heart that “it’s time” and he/she must sell. But bringing themselves into that moment of truth is often difficult and painful.

One of the ironies in all of this is that the typical buyer is completely emotionally detached. The buyer is looking at the numbers, the profitability, the overall operation of the business etc. Frankly the buyer doesn’t care about the seller’s emotions. The buyer is interested in the business, yet he must deal with the seller’s emotions. This is where the role of the business broker can help. But, unless the broker is something of an arm-chair psychologist, the deal is apt to fall apart and, of course it does. The statistics bear this out.