Fielding offers to sell your business is a delicate process, and if not approached cautiously and sensibly, it can result on a minimized sale price – or no sale at all.
This article highlights three common mistakes to avoid when reviewing offers for the sale of your business.
1. You Don’t Have Take The First Offer
Taking the first offer might be tempting, but there is good reason to take your time when the first offer is made.
The first offer is not necessarily the highest offer of that particular buyer. Rather than accepting it, take the opportunity to negotiate.
You should ask yourself:
- Is this a fair offer?
- Are similar businesses being sold for this price?
2. Don’t Be Unrealistic (Consider The Market’s Willingness to Pay)
Some business owners believe their business is worth more than the price for which buyers are offering to buy it.
The problem with this attitude is that the people who set the prices are the market. The buyers market is the ultimate deciding factor on what a business is worth.
You might think your business is worth more than what prospective buyers are offering (and you might be correct); however, that doesn’t change the fact that it is the buyer who ultimately dictates the final price.
If the business is priced higher than any buyer’s willingness to pay, the business will not be sold.
3. Taking Too Long to Accept an Offer
There are more businesses on the market than there are buyers.
Buyers have many options. If one option falls through, they have many others to choose from.
This is why you should act promptly when an offer is made. This doesn’t mean immediately accept the offer, but it does mean you should aim to respond within 1-3 business days.
It might be tempting to hold out on accepting a reasonable offer, in the hope of a slightly higher offer coming along. This is reasonable, but also risky. If you’ve essentially secured an interested buyer who has made a reasonable offer, it is best to take the offer.
