Business brokers from all across the United States were asked what issues caused their deals to fall apart, and instead of a wide range of reasons, the same few came up time and time again. It can be very difficult to get a business deal all the way to the closing table, but knowing ahead of time what types of problems might derail your deal can help you to avoid them. What follows are a series of articles about the major deal-killing culprits and how you can avoid them in your own business transaction
Deal Killer #2: The Business is Overpriced
You may want the world for your business, but the reality is your business will only sell for what buyers are willing to pay.
So what are buyers willing to pay? They are willing to pay for what a seller can prove.
If you are a seller, seek the advice of a qualified and experienced business broker before you settle on a listing price for your business. The business market is a dynamic place and only a business broker will know how to use your financial statements, what you have in inventory and equipment, and what comparable businesses in your area have actually sold for to come up with the most realistic listing price for your business.
Using someone like your regular CPA or your regular attorney to price your business can be a big mistake. Their expertise lies in other areas of your business, so when the time comes to sell, find yourself a good business broker to get you listed on the market.
If you list your business too high, two things will happen. First, buzz on the market that your new listing generated won’t bring in the buyers you may have expected. Your listing will seem overpriced and therefore not worth looking at. Second, your business will stay on the market indefinitely. Do yourself and your business a favor and price it right the first time around.
If you are a buyer, be aware that just because a business is listed for a specific price, that does not mean the business will ultimately sell for that price. Look carefully at any business you are considering to try and figure out how the seller arrived at the price they are asking for. This is another good area to employ the services of a great business broker, as they can help you decide if the business is worth what someone is asking for it.
Are you a seller who wants to price your business right? Are you a buyer who has questions about how to decide if a business is worth what it’s listed for? Leave us a comment or question here, and we will help answer any questions you might have.
Want to read Deal Killer #1: The Seller Tries to Hide the Skeletons in the Closet? Click Here.
Want to read Deal Killer #3: The Buyer, The Seller (Or Both) Take Issues That Arise Personally? Click Here.
Want to read Deal Killer #4: Buyers and Sellers Grow Impatient With The Deal and With Each Other? Click Here.