Video 6 – Waiting For A Better Price – What Are The Risks When Selling Your Business

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Mike Whittle:

Let me leap on that one Rob, if I may. This comes up quite a lot, particularly in the climate as things are now, businesses might be looking at what’s happening in the world today and deciding it might be a good idea to wait. And sometimes that’s true, but often that can have as much risk associated with it as it can potential gain. I’ve had a couple of transactions over the last couple of years where people have waited for particular contracts to come in, which haven’t come in. And then subsequently finances have dropped away in the business and the value has gone down.

Mike Whittle:

For us, we talk about the length of time, that’s involved in the preparation of the process. And I think people need to understand that there’s an investment in that anyway. And if there are things that are happening in the business that’s part of the normal flow of that business’s’ operation, whether those contracts are [inaudible 00:00:59] or not. Our advice would be, if you’ve made the decision that you want to sell your business, you’re better off getting on with it.

Rob Goddard:

What do you think, Steve, about greed coming into it? On the part of the seller.

Steve Barry:

It’s a fascinating one because …

Rob Goddard:

Charged question.

Steve Barry:

Yeah, it is a charged question and we identify with every client we take to market what their minimum walk away would be. We’re trying to get a steer as to what they’d be prepared to accept and part with what they’ve created over a period of time. And that gives us a yardstick against which we can judge, in a competitive environment, how much the price can move. But you’d be amazed how many times you get to evaluation that’s substantially in excess of the walk away and the vendor said, well, maybe we just try a bit harder, maybe we just try a bit harder. Or maybe we just try and push them a bit further in terms of what we do.

Steve Barry:

It is a factor that sits there. But fundamentally, my take would be, once somebody is exceeded the value that they wanted to achieve the right thing to do is to make sure the partners right, the deal value is right, the deal structure is right. And in our experience, that’s very rarely dependent on a particular point in time or an event in time, it’s a judgment call made over a period of several months or even future years on behalf of the investor. Actually, it’s better to do it with the right partner at the right value and then be able to enjoy the benefit from it.

Rob Goddard:

It’s not just the best bid, it’s the best bidder as well.

Steve Barry:

Absolutely. In fact, we go as far as preferred bidder and then preferred bid.

Rob Goddard:

Right.

Steve Barry:

Yeah, definitely. Yes, absolutely.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

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