When to Wait it Out or Lower Your Price in M&A
It’s tough to tell how long you should stick to your guns or just sell with what offer you get.
Selling a business isn’t always slam dunk. It generally takes six months to a year.
Sometimes the right offer can come quickly.
Sometimes the first offer is the best offer. 60% of the time you should take it if it’s in the ballpark.
But many times people will low ball you along the way. And you have to ride it out.
It depends on various factors.
Are you able to bring in cash flow now? If you’re able to, then it is an important factor where you can wait for your price.
If you need the sale for money then obviously get what you can sell it for while making it work while.
However, there is a key distinction that some sellers make.
Just because you want to retire or pay bills it doesn’t mean the business is worth that.
The gut number you may have as a seller might be adequate but it may be wrong and overvaluing because of other factors that aren’t key indicators of this deal.
However we always try to get the seller what they want.
The key is what are you willing to take and how long are you willing to wait for it.
Time is reflective of the deal and has an inverse relationship typically. The longer you wait the lower the price you’ll eventually take for it.
Unless the business does better over time or some positive market force comes into play out of field that wasn’t expected.
The key is to really hone in on how much time you have to cover your bills and get the right buyer. That right buyer who pays your price may come in the 4th month. It may take a year. It may take a week.
The question is how much risk can you take to wait that year for the right buyer.
Because generally the better it’s priced the quicker it sells because now you open the door to buyers who are keen on a deal or have a certain multiple they stick to.
Remember business buyers generally fall into a few buckets.
Number one is a person looking for exactly a business in your industry who is an inexperienced buyer.
Number two is an investor type who does these deals frequently.
When you overprice the business you basically price out of bucket number two and try to get bucket number one to buy.
If you need a sale open the door to bucket number two and price it right.
If you are not desperate stick to bucket number one and shut down the investor types.
If you want a team who can help sell your business and negotiate a deal for you, please reach out to us:
Phone – (800) 773-1523
Email – [email protected]
Leader in Acquisitions with Expertise in Representing Sellers & Buyers on Deals
Jarbly is a leader in acquisitions with expertise in helping with listings, negotiations, LOI's, asset purchases, company purchases, and real estate purchases. JARBLY has access to high net worth individuals if you are on the sell-side and businesses that may be of interest to you if you are on the buy-side.
- Phone: (800) 773-1523
- Email: [email protected]