7 mistakes to avoid when selling an SME

Why So Many Business Transfers Fail in Switzerland

Before diving into specific mistakes, it's essential to understand why the failure rate of business transfers remains so high in Switzerland. The reasons are multiple and often interconnected.

Firstly, selling a business is an exercise that most entrepreneurs only undertake once in their professional life. Unlike other aspects of business management where experience accumulates, company sales remain largely uncharted territory for the majority of sellers.

Secondly, emotional attachment to the entrepreneurial project often clouds judgment. What should be a rational commercial transaction becomes a process laden with emotions, nostalgia, and sometimes denial in the face of certain market realities.

Thirdly, the Swiss business transfer market has significant specificities: cantonal tax complexity, strict regulatory requirements, limited pool of qualified buyers in certain sectors, and high expectations regarding due diligence.

Finally, many owners drastically underestimate the time and resources required to successfully complete a sale. A well-prepared business sale ideally requires 2 to 3 years of preparation, an investment that few anticipate correctly.

These combined factors create fertile ground for mistakes. But the good news is that each of these mistakes can be avoided with the right approach and the right advice.

Mistake #1: Waiting Until the Last Moment to Prepare the Sale

This is undoubtedly the most common and costly mistake when selling an SME. Too many owners wait until they're confronted with an emergency situation before seriously considering the sale: imminent retirement, health problems, burnout, or financial difficulties.

This reactive approach immediately places the seller in a position of weakness. Potential buyers quickly perceive the urgency and can take advantage of it to negotiate more favorable terms. Moreover, lack of preparation often translates into incomplete financial documents, improvised organization, and poorly justified valuation.

The consequences are tangible:

• Undervaluation of the business that can reach 20 to 30% of its real value

• Rushed sales process that frightens serious buyers

• Insufficient documentation that delays or causes due diligence to fail

• Inability to optimize tax and structural aspects of the transaction

• Stress and decisions made under pressure

The solution: anticipate and plan

Business transfer experts recommend starting preparation at least 2 to 3 years before the desired sale date. This period allows you to:

• Optimize the company's financial performance over several fiscal years

• Professionalize the organization and reduce dependence on the owner

• Build complete and structured documentation

• Identify and correct weaknesses that could deter buyers

• Explore different tax structuring options

At Leez, we offer a free assessment that allows you to evaluate your company's value and continue the process with an expert from our network if necessary. This first step, with no commitment, can save you months of preparation and tens of thousands of francs in optimized valuation.

Mistake #2: Overvaluing or Undervaluing Your Business

Valuation is probably the most delicate aspect of any SME sale. Two opposite pitfalls await sellers: overvaluation due to emotional attachment and undervaluation due to lack of knowledge of valuation methods.

The trap of overvaluation

After years of hard work, it's natural to overestimate the value of your business. The owner mentally incorporates personal sacrifices, sleepless nights, risks taken – elements that have no market value for a rational buyer.

Studies show that the gap between the owner's subjective valuation and the market's objective valuation can reach 30 to 40%. Excessive overvaluation immediately drives away serious and professional buyers, leaving only opportunists or the merely curious.

The risk of undervaluation

Conversely, some owners, due to lack of knowledge of valuation methods or desire to close quickly, literally sell their assets for a pittance. They ignore the value of their intangible assets (loyal customer base, intellectual property, know-how), underestimate their growth potential, or apply outdated sector multiples.

The solution: professional valuation

To avoid both pitfalls, a professional valuation is essential. It must take into account:

• Recognized methods: DCF (discounted cash flows), sector multiples, asset valuation

• The specificities of your sector and positioning

• Market trends and recent comparable transactions

• Tangible and intangible assets

• Growth potential and possible synergies

A well-documented and justified valuation allows you to negotiate from a position of strength, with objective arguments when facing buyers. It also forms the basis of a coherent sales strategy.

Leez offers a business valuation service free of charge, conducted according to professional standards, which gives you a realistic value range and the arguments to defend it during negotiations.

Mistake #3: Neglecting the Preparation of Financial and Legal Documentation

The due diligence phase is the moment of truth for any business sale. This is when the potential buyer meticulously examines all aspects of your company. Incomplete or disorganized documentation is one of the most common factors in transaction failures.

Essential documents often missing:

• Audited annual accounts for the last 3 to 5 years with detailed analysis

• Realistic and justified financial forecasts

• Key contracts with clients, suppliers, and partners

• Documentation of intellectual property assets (patents, trademarks, licenses)

• Complete and up-to-date tax situation (VAT, taxes, social charges)

• Detailed list and analysis of customer base

• Employment contracts and personnel situation

• Commercial leases and real estate documentation

• Insurance policies and claims history

• Operating procedures and technical documentation

The impact of deficient documentation

We've seen a case where a promising business sale was delayed by 8 months because the seller didn't have formalized contracts with their main clients. By the time the situation was regularized, the history reconstructed, and the buyer reassured, several precious months were lost, and the valuation was ultimately revised downward by 15%.

Incomplete documentation sends negative signals:

• Lack of professionalism in management

• Potential hidden risks

• Administrative complexity that will delay integration

• Justification for renegotiating the price downward

The solution: prepare a complete data room

Anticipate due diligence by building a virtual data room that is organized and complete right now. Structure your documents by categories (financial, legal, commercial, HR, operational) and ensure everything is up-to-date and easily accessible.

This preparation offers a dual advantage: it significantly accelerates the sales process and demonstrates your professionalism to potential buyers, strengthening their confidence and your negotiating position.

Leez offers a secure due diligence platform that allows you to share your documents in a controlled manner with qualified buyers, while maintaining complete traceability of access and consultations.

Mistake #4: Going It Alone Without Professional Support

Faced with the fees of specialized intermediaries and advisors, some owners are tempted to manage the sale of their SME alone. This "do-it-yourself" approach is understandable from an economic standpoint, but it's rarely the most profitable in the long term.

The risks of going solo:

• Public exposure: Publicly announcing that your business is for sale can worry your clients, suppliers, and employees, creating harmful instability

• Compromised confidentiality: Without a structured process, you risk disclosing sensitive information to unqualified people, or even to disguised competitors

• Poor targeting: Identifying the right buyer profiles requires in-depth market knowledge and specialized networks

• Legal and tax errors: Structuring a sale transaction is complex and a mistake can cost you tens of thousands of francs

• Unbalanced negotiation: Facing a buyer accompanied by professional advisors, the isolated seller is in a position of weakness

The statistics speak for themselves

Industry studies show that the success rate of supported transfers is 3 times higher than that of individual approaches. Moreover, the final valuation obtained is on average 15 to 20% higher, largely compensating for intermediary fees.

The solution: surround yourself with the right experts

A successful business sale requires the coordinated intervention of several specialists:

• Transfer/M&A advisor: To manage the process, value the business, and identify buyers

• Specialized lawyer: To legally secure the transaction and draft contracts

• Accountant/tax specialist: To optimize the tax structuring of the operation

• Sector expert: To provide detailed knowledge of your market

Rather than assembling this team yourself, a specialized platform like Leez gives you access to a network of qualified and verified buyers, as well as an ecosystem of expert partners (lawyers, tax specialists, advisors) specialized in business transfers.

Our approach guarantees confidentiality, professionalizes the process, and maximizes your chances of achieving a successful transaction under optimal conditions.

Mistake #5: Not Seriously Qualifying Potential Buyers

Once your business is on the market, you'll probably receive numerous expressions of interest. The common mistake is to treat all these contacts the same way, spending time and disclosing information to people who aren't genuine potential buyers.

Fake buyers: a real problem

Among the contacts you'll receive, you'll find:

• The curious: Who are interested without real purchase intention or financial capacity

• Disguised competitors: Who seek to obtain strategic information about your business

• Unfunded buyers: Who dream of taking over a business without having secured financing

• Opportunists: Who are looking for a "good deal" at any price, without a serious project

• Information collectors: Consultants or students conducting "market studies"

The consequences of this mistake:

• Considerable time wasted with unqualified contacts

• Risks to confidentiality and leakage of strategic information

• Progressive demotivation in the face of approaches that don't lead anywhere

• Negotiation fatigue that can push you to accept a suboptimal offer

The solution: a rigorous qualification process

Before sharing detailed information about your business, implement a structured qualification process:

• Non-disclosure agreement (NDA): To be systematically signed before any communication of sensitive information

• Qualification questionnaire: To understand the buyer's motivations, experience, and project

• Proof of financial capacity: Bank certificate, letter of intent for financing, or proof of equity

• Verifiable references: Professional background, previous entrepreneurial experiences

• Qualification interview: To assess the seriousness and suitability of the project

This initial filtering may seem tedious, but it saves you precious time and protects your interests.

The advantage of a specialized platform

On Leez, all buyers are verified and qualified before accessing detailed listings. We validate their identity, seriousness, and financial capacity, allowing you to focus your energy only on candidates truly relevant to your sale project.

Mistake #6: Neglecting the Transition Period and Support

Many sellers imagine that once the contract is signed and payment made, they can immediately turn the page and head toward new horizons. This romantic vision of immediate exit is one of the most costly mistakes for the sustainability of the sold business – and potentially for your professional reputation.

The reality of the transition period

In the vast majority of successful transactions, the seller remains involved during a transition period of 6 to 12 months after the sale. This phase is crucial to:

• Transfer key relationships with main clients

• Train the buyer on operational and strategic specificities

• Reassure employees and facilitate the new manager's integration

• Support the transition with suppliers and partners

• Transfer tacit know-how and "tricks of the trade"

A concrete example of a failed transition

We observed the case of an industrial SME with 25 employees sold at an excellent price. The seller, exhausted after years of intense work, left the company two weeks after signing. Result: three major clients (representing 40% of revenue) terminated their contracts within six months, worried about the abrupt change. Two key executives resigned. The company's performance dropped by 35% in the first year.

The buyer, although competent, found himself in difficulty and threatened to activate the warranty clauses in the sales contract. A lose-lose situation that could have been avoided.

The solution: contractually plan the transition

To succeed in this critical phase:

• Contractually provide for the support period: Duration, number of days, remuneration, scope of intervention

• Establish a detailed transition plan: Schedule of presentations to stakeholders, progressive training, transfer of responsibilities

• Organize key meetings: Personally introduce the buyer to strategic clients, suppliers, and employees

• Remain available for advice: Even after the formal period, maintain availability for occasional questions

• Gradually dose disengagement: Gradually reduce your presence rather than an abrupt break

This approach protects the value of what you sold, preserves your reputation, and significantly facilitates the buyer's integration. It's a time investment that secures your transaction and helps you avoid potential post-sale disputes.

Mistake #7: Underestimating Tax Aspects and Transaction Structuring

The taxation of business sales in Switzerland is formidably complex. Poor transaction structuring can cost you between 20 and 30% of its net value. Yet, many sellers only address these issues at the last moment, when room for maneuver is already reduced.

Swiss tax complexity

Several tax dimensions come into play during a sale:

• Capital gains tax: Depending on whether you sell shares (capital gain generally tax-exempt for individuals) or assets (taxable)

• AHV contributions: For the self-employed, part of the gain may be subject to social security contributions

• Cantonal variations: Rules and rates vary considerably from one canton to another

• Occupational pension: Impact on the 2nd pillar and possible buy-in before the sale

• Timing of the sale: Timing in relation to retirement and LPP buy-ins

• Holding structure: Personal holding vs. direct ownership

A revealing practical case

Let's take the example of an SME sold for 2 million francs:

Scenario A (without optimization): Sale of assets by a self-employed person close to retirement. Result: approximately 400,000 CHF in AHV contributions + cantonal taxes. Net received: approximately 1,400,000 CHF.

Scenario B (with optimal structuring): Transformation into a corporation one year before, sale of shares, staggering with retirement, anticipated LPP buy-ins. Result: capital gain tax-exempt, AHV optimization. Net received: approximately 1,850,000 CHF.

Difference: 450,000 CHF – nearly 25% of the transaction value, simply through optimal tax structuring.

The solution: anticipate and consult specialists

To optimize the taxation of your sale:

• Consult an M&A tax specialist from the start: At least 18-24 months before the planned sale to have time to implement optimal structures

• Explore all structuring options: Sale of shares vs. assets, staggering, involvement of a holding company, etc.

• Anticipate AHV/LPP implications: Particularly crucial if you're approaching retirement age

• Consider succession aspects: If relevant, integrate succession planning into the reflection

• Document your strategy: Well-documented and justified structuring better withstands potential tax audits

At Leez, we work with a network of tax specialists and lawyers specialized in business transfers. They know the cantonal specificities and best practices to legally optimize your tax situation. The investment in this advice systematically pays for itself several times over in the final transaction.

Checklist: Key Steps to Avoid These Mistakes

To help you structure your business sale project and avoid the mistakes detailed above, here's a timeline checklist of critical actions to undertake:

24-36 months before the planned sale

• Conduct an initial indicative valuation of your business

• Consult a tax specialist to identify possible optimizations

• Implement optimal legal structures if necessary

• Identify the company's weaknesses and establish an improvement plan

• Start reducing your personal dependence (delegation, process documentation)

• Optimize financial performance and profitability

• Secure key contracts with clients and suppliers

12-18 months before the planned sale

• Conduct a complete professional valuation

• Build the data room with all necessary documentation

• Professionalize the management team and strengthen key executives

• Have the accounts audited if not already done

• Regularize all legal and contractual aspects

• Prepare a professional presentation memorandum

• Define your exit strategy and criteria for the ideal buyer

• Assemble your team of advisors (lawyer, tax specialist, intermediary)

6-12 months before the planned sale

• Discreetly launch the search for potential buyers

• Implement a rigorous qualification process

• Prepare non-disclosure agreements (NDAs)

• Organize initial presentations with qualified candidates

• Anticipate due diligence questions

• Consider your role during the transition period

• Psychologically prepare your team for change (without premature disclosure)

During negotiation

• Facilitate due diligence with an organized data room

• Respond quickly and completely to information requests

• Negotiate all aspects: price, payment terms, warranties, transition period

• Have all contractual documents reviewed by your advisors

• Validate the buyer's financial strength

• Plan the transition period in detail

After signing

• Communicate the change to stakeholders in a coordinated manner

• Personally introduce the buyer to key clients and partners

• Train the buyer on the company's specificities

• Remain available throughout the contractual transition period

• Ensure a progressive transfer of responsibilities

• Respect non-compete and confidentiality clauses

This checklist may seem intimidating, but it reflects the reality of a well-prepared business sale. Each action checked significantly increases your chances of success and the final valuation obtained.

Succeeding in Your Sale with the Right Preparation and the Right Partners

The sale of an SME is undeniably a complex project that involves your wealth, your reputation, and the future of the business you built. The seven mistakes we've detailed – from late preparation to neglected tax optimization – are responsible for the majority of failures or disappointments in business transfers.

The good news is that all these mistakes are avoidable. They don't result from fate, but from a lack of anticipation, information, or support. With the right preparation, the right advice, and the right tools, you can maximize your chances of successfully completing your sale under optimal conditions.

The numbers confirm it: thousands of business transfers succeed every year in Switzerland. Sellers who start early, surround themselves with competent experts, and follow a structured process obtain significantly superior results – both in terms of valuation and personal satisfaction.

Key success factors:

• Anticipate preparation 2-3 years in advance

• Obtain an objective professional valuation

• Build complete and organized documentation

• Surround yourself with advisors specialized in transfers

• Rigorously qualify potential buyers

• Plan an adequate transition period

• Optimize the tax structuring of the transaction

Your business probably represents your main wealth asset. It deserves that you invest the time and resources necessary to successfully complete its transfer. This is not the time to take shortcuts or improvise.