What follows are the characteristics of business sales that makes the selling process unique and varied:
- Business assets are intangible - Business value is typically tied to its “goodwill,” which can’t be photographed and isn’t easily understood by buyers;
- Marketing is done confidentially - While you might want to openly market your business for sale, you can only tell certain people due to the negative impact such news might have on your customers, employees, and vendors;
- Few or no ‘comps’ exist - Sales of comparable businesses are typically hard or impossible to find;
- Buyer financing is limited – Buyers need to have cash, stock, or an ability to leverage existing assets to finance a business purchase;
- Negotiations are about more than price – While price is still the most emotional component of a business sale, other forms of ‘purchase consideration’ enter into the negotiation to bridge the gap between buyer and seller price expectations.
- Negotiating leverage comes and goes fast – For many companies being sold, there are a limited number of potential buyers. Unlike a house where each decrease in price brings a whole new segment of buyers, a decrease in price for a business generally has no effect. And given the confidential nature of most business sales, letting buyers know that you’ve decided to take a lower price is extremely difficult, often requiring the whole sales process to start over.
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