The Danger of Hearsay Advice

Common mistakes SME business owners make when selling their business and how these mistakes can be costly.

Transactions are rarely that simple. Two businesses in the same sector can command very different valuations depending on margins, customer concentration, management depth, recurring revenue, growth prospects and buyer fit.

Size alone does not determine value.

Seek Professional Advice Today

What matters is understanding who the right buyer or investor may be. Sometimes the first step is not going to market - it is speaking to the right person.

An experienced transaction adviser can help you assess value more objectively, identify options you may not have considered, and determine whether your business is ready for market.

Misconception #1: “My friend in the same trade sold his company for $X. Mine is bigger, so I should get more.”

Misconception #2: “My partner suggests that we list our company first and see what the market says before deciding on the final price.”

Going to market before being prepared can weaken buyer confidence and affect outcomes. In many cases, preparation before a sale process is what helps create value.

Understanding what investors are looking out for is the most important factor in determining your final price.

Misconception #3: “My brand has been around in Singapore for almost 50 years. Surely investors must give me a good price for this long history?”

A long operating history is meaningful. It reflects resilience, brand recognition and the ability to stay relevant over time, which many buyers value.

At the same time, different investors look for different things. Some value cash flow stability. Others value niche positioning, strategic fit or platform opportunities. Longevity becomes valuable when it is supported by commercial strength that a buyer can build on.

The key is understanding how your track record translates into value for the right group of investors.

Business owners often receive informal advice about valuations, investors, and deal structures from people whose experiences may not reflect current market realities.

Misconception #4: “I attended a seminar and was told businesses can sell for 4 to 6 times their annual profits. I should not settle for less.”

Market multiples are often shared in seminars as broad references, but they are not universal pricing formulas.

A multiple is often the outcome of many underlying factors, not the starting point of valuation. Profit quality, customer concentration, growth prospects, management depth, recurring revenue, sector dynamics and deal structure can all affect where a business may sit within, above, or below a broad range.

Applying a generic multiple without understanding these drivers can create unrealistic expectations and may cause owners to reject credible offers while waiting for valuations that may not be supported by the market.

The more important question is often not what multiple should my business command, but what drives value in my business, and to which buyer. That distinction can make a material difference.

Misconception #5: “IPOs are only for large corporates. My company is too small to qualify.”

Some business owners rule out growth capital or future public market pathways far too early.

While not every business is suited for this route, many dismiss the possibility without understanding what may be achievable over time with the right preparation. Assumptions can limit options before they are properly explored.