26 Feb Heed Econ 101 Lesson when selling your business
Question 1: What did you learn in Econ 101?
Answer 1: Price is determined by the balance of supply and demand.
Question 2: Why do some business sellers work with just one buyer at a time?
Answer 2: Great question!
If you’re a business owner who cares about the price you obtain when you sell your business, remember what you learned in Econ 101. The only way to increase price is to increase demand.
Think about it. There are plenty of buyers for your business. Plenty with money and real motivation. They just don’t know your business is for sale. So to maximize your sale price you need to run a process that includes more than one motivated and capable buyer.
Another important factor is, your business is unique. One of a kind. And there aren’t many businesses for sale at a given time. But buyers are everywhere. Everyone wants to own a business. And most current owners would like to expand via acquisition. So why limit your discussions to just one or two buyers (if you wish to maximize value)?
The balance of supply and demand determines price. There is absolutely no way you’ll obtain a maximized sale price if you fail to alert multiple capable and motivated buyers about the opportunity. Further, you must give them the information they need to make their decision and “work them” all simultaneously.
The basic elements of selling a business are not complex. For a one-of-a-kind product, price will rise when the motivated buyer pool is expanded. That’s what good auction houses do. Identify and inform all the capable buyer candidates. Get them in the same room, at the same time, and then “work” them all with urgency and finality.
At Acquisition Advisors, we’ve worked these elements into our proven process. We know how to sell businesses quietly, professionally, and for absolute maximum. If you own a profitable company and are considering selling, email me (David Perkins) at email@example.com. We should talk.