Tips for Selling Your Business #5

PRICING

When you decide to sell your business, what price do you ask? Your business broker can help you by giving an “opinion of value”. Business brokers are not appraisers, but, based on comps and experience, a business broker can advise you based on market value.

On occasion, the business owners idea of value may be more than what is realistic. If the owner and his broker can not agree, I feel it is better for me to not take the engagement as their broker. The reason is that pricing a business is not like selling your house. You’ve probably heard people say when they know they are overpricing their house, “if they like it, let them make me an offer”. When selling a business, generally, the price is the price.

Buyers of businesses are interested in how much money they can put in their pocket after expenses. The first thing a buyer will ask is “how did you arrive at that price?” If the profitability doesn’t justify the price, the buyer loses confidence in our presentation and moves on, deleting your business from his consideration.

Pricing is a complicated process, and more time needed than you would want to spend reading this blog. However, if you would like to discuss this in more detail, please feel free to contact us.