I run a small retail business in Liverpool and I'm getting ready to sell. Sales have been slipping over the last 18 months, and I'm not sure if I should be upfront about that with buyers or just present the best possible picture. I don't want to deceive anyone, but I also don't want to scare people off before they even look at the business. Has anyone been through this and can advise?
Business Sale
Should I disclose declining sales before putting my Liverpool business on the market?
You need to be honest. If a buyer finds out later that you hid declining sales, they could sue you for misrepresentation. It's not worth the risk.
Hiding declining sales is a terrible idea. It'll come out during due diligence anyway. Better to be upfront and explain why sales are down - maybe theres a reason that can be fixed.
I sold my business last year and had a similar situation. I disclosed the decline but also showed a plan for turning it around. The buyer appreciated the honesty and we negotiated a lower price, but at least the deal went through without any legal issues.
Thanks for the replies. I think deep down I knew I had to disclose, but it's reassuring to hear others say it. The idea of explaining the decline and having a turnaround plan makes sense.
You should definitely disclose. But be careful how you present it. Don't just dump the bad news; provide context. Maybe the decline is due to a temporary issue like roadworks or a competitor opening nearby. Show that you've analysed the problem.
Declining sales will affect valuation. If you hide it, you might get a higher offer initially, but once due diligence starts, the buyer will find out and either walk away or renegotiate. Better to be upfront and manage expectations
That's what i'm worried about - the deal falling through after due diligence. I'll disclose and be transparent about the numbers. Thanks for the advice.
One more thing: make sure you have clear records of everything. If you can show that you've been monitoring the decline and taking steps to address it, that will help build trust with the buyer.
also, consider getting professional advice from an accountant or business broker. They can help you present the financials in a way that's honest but still attractive.
I agree with getting advice. But don't let them talk you into hiding anything. Some brokers might suggest painting a rosy picture, but that's risky.