Business Broker Services has developed the following scenario as an example that may be helpful when negotiating the selling of your business should you try it on your own.
A Buyer visit’s a Seller’s facilities and likes what he sees. “I’m very impressed,” he says. “I like everything I’ve seen here today.”
The Buyer reacts to the Seller’s asking price with no concerns or objects and says that an allcash sale might be preferable. The Buyer’s only concern is whether there are other buyers in the picture. The Buyer explains that his company’s attorneys, accountants, and numerous other advisors will need to review everything.
The meeting ends. The Buyer has the financials, other confidential details, and a 60-day standstill agreement. The Seller seems to have what he’s dreamed about—full price, all cash, and a buyer who will act quickly.
During the next 60 days, The Seller is dreaming of a life with all that money and freedom. His desire to sell becomes very strong.
Meanwhile, the Buyer runs the financials through every valuation methodology and pricing equation model available, and creates printouts.
The Buyer then returns with the low-price printouts and other ammunition. He explains how he could use the Seller’s help to keep the sale moving because his financial advisors could not justify the Seller’s price. The Buyer does not argue price. He asks for help from the Seller to review and discuss the Buyer’s computer printouts.
The Buyer “teaches” the Seller by explaining how “professionals” value a business and establish price. After several hours and some token adjustments for the Seller, a lower price is arrived at. The Buyer leaves with an agreed-upon lower price. The Seller now thinks that the negotiations are over. Later, however, the Buyer comes back and asks for more concessions.