Few negotiations are as 'spirited' as when a privately held business is sold. There are valid reasons. The stakes are big for the business owner - in many cases, this represents their sole opportunity to realize upon a liquidity event to comfortably fund their retirement. Owners have every reason to expect fair market value for the business they have built. Buyers also want to ensure a fair return on their investment.
The last million is often the toughest to negotiate. Ego and emotions come into play both of which tend to cloud sound judgement. With the preoccupation understandably on purchase price, there are other important items to negotiate when selling a business:
But the most important factor is not even on the 'list'- the relationship between the owner and potential buyer as it grows, or deteriorates, over negotiations. By going to market, our company usually presents two or three offers to our clients. We have had offers rejected for no other reason than our clients were not comfortable putting their business in the hands of the buyer. The decision had nothing to do with the almighty dollar - the parties just didn't like each other.
In their overly zealous efforts to 'win', buyers sometimes run the risk of losing.
Rincroft facilitates the divestiture of medium sized businesses. Our clients are companies which are well established and profitable. Since its inception, our company has completed the sale of more than 50 business across a wide range of industries. We also provide advisory services assisting owners in building sustainable value even if they have no immediate plans to sell.
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