04 Feb Why Do Many Business Sellers Forget the Basic Economics of Supply and Demand?
Why Do Many Business Sellers Forget the Basic Economics of Supply and Demand?
Every business seller wants a high price, right? Of course. Most want the absolute highest price possible. Sure can’t blame ‘em, I would, too.
I love helping business sellers get that crazy high price. It’s exhilarating to me (and profitable).
So, what is it that drives price up? Yes, the answer is simple — demand.
If you want to sell for a high price, what do you need? Demand. That is, lots of buyers. Lots of eager buyers with motivation and money.
So why is it that many business owners decide to do it themselves and negotiate with just any buyer who contacts them? Or contact a single buyer and try to work out a deal. Rarely does this work, and even when a deal gets done, how do sellers know they received a top price? In almost every case, they did not. The buyer just did not have the pressure necessary to extract the absolute maximum price.
Some business sellers have the notion that they can get the important job of securing a high price done right by doing it themselves. But the reality is that there is no way they can accomplish this. They don’t have the time, energy, buyer contacts or ability to be hard-and-fast* like an M&A advisor.
Does this make sense?
*This is because the seller wants and needs the buyer(s) to like him. There’s a tremendous amount of pressure on the seller to be “nice.” To be accommodating. Great deals aren’t done this way. The seller needs a bad guy, a sidekick who says, “SHOW US THE MONEY!”