Selling Your Business? How To Survive The Low-Ball Offer



If you are trying to sell your business, you may already realize what a stressful process this can be. You have to assemble all of your records, answer a constant stream of questions, deal with new requests from prospective buyers – all while trying to maintain your business in good working order.

 

You’ve worked hard at your business – invested time, money and energy. To you, the value is more than money. The business is an extension of your life.

 

The problem is, to any buyer walking through the door your business is just one of many, and the numbers on the bottom line mean more than anything else.

 

What happens when these vastly different views of a business collide? In some instances the result is a low-ball offer, where a buyer makes an offer so low a seller won’t even consider it, and oftentimes makes a seller unwilling to even negotiate with that buyer.

 

The low-ball offer is just a reality of having your business on the market, so if you are trying to sell your business, you’d better be ready to get one – and also be ready to keep your composure if it happens.

 

Many sellers see a low offer as a personal offense, but you have to remember that the only person who sees your business the way you do – is you.

 

You really shouldn’t be insulted by low-ball offers. Be happy you got an offer at all. The reality of the business market is your final selling price will be somewhere between your initial listing price and the first offer from a buyer. If you listed your business at the absolute rock-bottom price you are willing to take, that is a mistake, as is demanding that you get a full-asking price or there’s no deal. You need to be realistic and you also need to have thick skin.

 

 

Any offer, even a ridiculously low one, can be a starting point for negotiations.

 

Low-ball offers are typically from two kinds of buyers. The first are tire-kickers who low-ball sellers just to see if they can get a business for a steal. Most of the time this type of buyer never actually buys a business, they just shop around indefinitely. You will know if a low-ball offer is from this kind of buyer if the number is obscenely low, if the reason for the low offer is from way out in left field or if they have no explanation for the low offer at all.

 

The second type of buyer who makes a very low offer is a buyer who is looking for a deal. They low-balled you on the value of your business because they feel that you need to prove your asking price, but they want to get the deal rolling. For this type of buyer it is important to remember that your listing price is a jumping off point, not a non-negotiable price tag.

 

No matter what kind of offer comes in, consider it a step in the right direction. You will quickly be able to figure out if a buyer is serious or is just shopping around.

 

Are you a seller who wants to know how to handle a low-ball offer? Do you have questions about what makes an offer reasonable or how to begin negotiations? Ask us! Please leave us a comment or question here.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.InfinityBusinessBrokers.com


Why Now? And The Other, Deeper Questions Buyers Should Be Asking Sellers



 

When you start looking at businesses to buy, you will probably have a list of questions you’ll want answered by the sellers of the businesses you’re considering. The typical questions, like “why are you selling” and “how long have you owned the business” might seem pivotal.

 

However, there are a handful of more unconventional questions you should be asking that you may not have considered.

 

Why now?”

The “why are you selling” question is an important one, but another very important question needs to be based on the timing of the sale.

 

Sometimes the answer to both questions is the same – like in the case of a seller who is putting the business on the market because a sudden health emergency will prevent them from running the business. This scenario would not indicate issues with the business, rather personal issues with the current owner.

 

If there is not an impending emergency forcing the sale, then the answer to the “why now” question will be critical in determining the true health of the business.

 

If a business appears in good shape, then the “why now” answer should be something along the lines of “well, we’ve reached pivotal markers in the long-term exit plan for this business, and we are ready to move on to other ventures”. The seller in this situation decided long ago on the future sale of the business, and has been readying the business in that time.

 

If the answer to the “when did you decide to sell” question is “well, we decided yesterday” – then you should dig much deeper into the business, as a sudden urge to jump away from a perfectly good business should seem suspect.

 

Where did your listing price come from?”

For a seller the evaluation of their business can be tough. They’ve invested countless hours, large amounts of money and tons of energy – and placing a monetary number on something so life encompassing can be nearly impossible.

 

A listing price should be based on realistic terms, like the money the business generates and the value of the equipment – not on the emotional value or the sum of every penny the seller has ever spent on the business.

 

When looking at businesses be aware that some sellers find brokers who are willing to list the business for whatever the seller wants, no matter how ridiculous, just to have the listing. The prices of these businesses will be highly inflated and there will be no justification.

 

If you had unlimited resources, what changes would you implement to grow the company?”

Sometimes businesses remain stagnant and have limited growth because of lack of funds, sometimes it is because of the apathy of the seller.

 

Any seller who has an eye on the future and an eye on growth will already have considered this question and have an immediate answer.

 

If a seller hesitates or can’t come up with a reason, then they may not have been conducting their business with an eye on the future. Not good news for a new owner taking the wheel.

 

When you are looking for a business to buy, don’t just ask the basic questions. Questions like the ones above delve deeper into the motivations and actions of a seller and can tell you volumes about a business.

 

Are you a business buyer who would like to know what other questions you can ask sellers to delve deeper? Would you like to know more about what answers to these types of questions might tell you? Ask us! Please feel free to leave a comment or question here, and we will be happy to help. you with any questions in your business search.

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.InfinityBusinessBrokers.com



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242




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