Seven mistakes that destroy value before a sale

The value of a company is almost never lost at the negotiating table. It is lost long before, in ordinary decisions made without the sale in mind: a client allowed to grow too large, accounts kept vague, an owner who stays irreplaceable. When the buyer arrives, those choices turn into a discount, deferred price, or warranties that bind you for years. The good news is that each of these mistakes is fixable, provided you start twelve to twenty four months ahead. Here are the seven we see destroy the most value among SME and startup owners.

Mistake 1: remaining the center of gravity of the business

This is the most expensive mistake, and by far the most common. The typical case we see looks like this: the three largest accounts call the owner directly, the real margins live in the owner’s head, and no major quote goes out without their sign off. That owner is not selling a business. They are selling a job that does not transfer. A buyer understands this within the first meeting and protects themselves: a lower price, plus an earn out that keeps you captive for two or three years. The test is simple. Step away for eight weeks with your phone off. If the business wobbles, the work is there, and it takes time: hand off a function you carry alone, document the critical processes, make sure a key client knows at least two people at your firm.

Mistake 2: letting one client carry too much weight

A client worth 40% of revenue is a commercial asset and a nightmare at sale time. To the buyer it is concentrated risk: if that client leaves after the deal, the business collapses. They build it into either a lower multiple or a price top up conditioned on the client staying. A worked example: on a business valued at 5 times an EBITDA of 600,000 €, excessive concentration can justify a discount of half a turn on the multiple, or 300,000 € off the price. Diversifying takes quarters, not weeks: start early, or lock the client in with a multi year, assignable contract.

Mistake 3: keeping numbers you cannot defend

Value is set as a multiple of normalized EBITDA. The key word is normalized. Private expenses run through the company, an owner salary disconnected from the market, rents between related companies, one off items mixed in with the recurring: all of it blurs the real profitability. Calculating it is not the hard part. Proving it is. I have seen files lose tens of thousands of euros of adjusted EBITDA in due diligence simply because nobody could find the supporting documents. An adjustment without evidence gets thrown out, and the price it carried goes with it. Rebuild twelve to twenty four months of clean figures, with a supporting document for each adjustment.

• List every add back (private expenses, excess salary, one off items) with its evidence.
• Make gross margin reliable by product, client or service: the buyer wants to know where the money comes from.
• Separate the recurring from the one off clearly, because only the recurring earns the full multiple.

A buyer does not pay for the profitability you claim. They pay for the profitability you can prove.

Mistake 4: confusing cash with value, and draining it at the wrong moment

Two mirror image mistakes sit here. The first: letting surplus cash and assets that have no business being there sit on the balance sheet, the car, the property, a few investments. It clouds the definition of what is being sold and pulls attention away from what matters. The second, more tempting one: starving working capital just before the sale to inflate cash, by delaying suppliers or squeezing clients. Do not do it. The buyer normalizes working capital over time and spots the move within days; a price adjustment based on a target working capital level can then claw back most of the gain you displayed. Cash gets managed with discipline all year, not in the final quarter.

Mistake 5: ignoring the legal blind spots

This is where due diligence surprises hide, and each one becomes a price holdback or a broadened warranty. Found late, these points cost twice: in value and in trust. Handled early, they drop out of the file.

• Key client and supplier contracts that are unwritten, cancellable at will, or not assignable.
• Intellectual property, trademarks, domain names or software held in your name rather than the company’s.
• A commercial lease that runs out soon after the sale, with no renewal option.
• A key person with no non compete clause, a latent dispute, an unprovisioned tax or social security liability.

Mistake 6: not planning for tax on the sale

The deal structure (a share sale or an asset sale), paying out surplus cash beforehand, how the shares are held: these decisions weigh heavily on the net you keep, and most can no longer be made once the letter of intent is signed. Discussing the deal form early with a tax adviser can be worth tens of thousands of euros in net proceeds. It is one of the rare levers that costs the business nothing and demands only lead time: you simply have to start months ahead.

Mistake 7: improvising the file at the last minute

The buyer will ask for a data room: articles of association, accounts, contracts, org chart, key metrics. A complete, well ordered file speeds the deal up and earns trust. A patchy one does the opposite. Every missing document feeds doubt, every week of delay wears down your negotiating position, and fatigue eventually makes you accept concessions you would have refused in month one. Our guide to preparing a sale over twelve months lays out the calendar that turns this work into sale price.

Where to start

These seven mistakes share one trait: they are invisible until a buyer reveals them, and expensive the moment they do. The first useful step is not to fix everything at once, but to know where your business stands on each front: owner dependence, client concentration, quality of the numbers, cash, legal solidity, tax, file readiness. A structured exit readiness assessment tells you exactly which workstreams to open first, so you recover the value before it disappears into the discount.

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