Hard as it is to build a business, it can be harder still to sell one (successfully) because rudimentary errors are made. In the months ahead I fear we will witness many of them.
An increasing number of enterprises will be for sale next year as pent-up pressure built up during the years of recession and slowdown is released. But only some will be ready and not all will be valued honestly.
This is not good news for sellers or buyers and can bring a promising sale to a juddering halt. The truth is that many businesses are still in recovery after very tough times, only their owners may not know it; and their relief that the wider economy, at least in commercial terms, is doing well is likely to cause a form of economic blindness.
The basic first step to a sale is valuation. This is a process that should be about much more than just looking at a balance sheet, but much less about emotion.
It is also where the process can quickly go wrong. How easy to become starry eyed over a flattering price tag, and believe that the valuer is simply recognising what you always knew about your business: its fundamental brilliance.
In fact, less scrupulous valuers often have not resolved a thumping conflict of interest that comes from being too desperate to be involved in the sale process. Think dodgy or desperate estate agents.
The best advisers are those who can stand back, but also where the personal chemistry with the owner works so that, for example, the adviser and seller build a relationship of mutual trust. This facilitates the difficult conversations that are inevitable in a valuation and then the sales process.
The adviser's experience and reputation is vital to the chemical mix from which a proper valuation emerges. In other words, there must be every reason to trust them. A valuation report is a judgement, however impressive the letterhead of the firm providing it.
But they do have use. A thorough valuation will highlight the strengths of a business and set expectations, although a buyer will always form their own view, seeing different synergies and opportunities from an acquisition.
What a valuation should do is support the buyer's judgement, giving them reassurance that their opinions are correct, but not delude them.
An owner should start preparing their business for sale about a year before surrendering the office keys: embarrassing revelations in the middle of due diligence can be awkward.
The owner must look at their business dispassionately during the pre-sale period to assess its strengths, weaknesses and prospects. Self-inflicted flattery can be fatal.
Go everywhere; think about any lingering tax obligations, shareholder agreements and employment contracts. They will all be needed and scrutinised.
It is worth it because poor planning often results in a poor outcome. I know of a £3 million sale thwarted by an avoidable row of a £50,000 legal fee.
There are ways to significantly reduce the tax on a sale from, in some cases, 40 per cent to 10 per cent by understanding how entrepreneur's relief works. The moral of pointing this out is that a good adviser brought in early enough will make sure all relevant allowances are claimable.
There will be a flurry of merger and acquisition activity in the year ahead, unless the economy is unexpectedly blown off its recovery trajectory. The challenge will be to be part of it, for those interested, and not left behind through bad choices.