Knowing when to accept a business sale? Contact our business brokerage to help guide you through the process of how to buy or sell a business. We serve southern Ontario from Toronto to Hamilton.
It has been said many times that selling a business is an emotional process. As an owner, you must know well in advance what is important to you and also be somewhat flexible on deal terms if you want to successfully sell your company.
When an offer to purchase is submitted for your company, you may very well be disappointed with the first offer. As the owner, it is your prerogative to accept, reject or counter on any offer you receive. No matter how you proceed though, it is important to not have any regrets after the fact.
Knowing when to accept an offer to purchase a business
If you’re not too far apart on price
Suppose you are selling a business worth $400,000 and you and the buyer are only $5,000 or even $10,000 apart on the price. You need to ask yourself if it is worth it to push hard during the negotiations to get the final few dollars you were hoping for. You should always get want you want from the sale but be careful you don’t get caught up in the heat of the moment and second guess your decisions later on. In the final analysis, you need to ask yourself if $5,000 or $10,000 is really going to impact your lifestyle after the sale. For example, suppose the deal on the table had all of the other things you were looking for. It might be a good idea to take the offer. Selling a business is different than selling a house or a piece of land. The sale cycle could be potentially much longer (and certainly much less liquid) and you might not get as good an offer again down the road so choose wisely. An experienced business broker can act as a good sounding board for you during this stage of the deal.
If the timing is a little off
Suppose you sold a business and got everything you wanted from the deal except the closing date was off by 3 or 4 months. Should this be a reason not to accept the offer? The truth is, you may reject an offer due to timing issues and not get a comparable offer for months later.
If seller financing is part of the offer
Most business owners want to get their money out when they sell their business. Most do not want to hold seller financing after the transaction closes. However, it is important to understand that some businesses are incredibly difficult to get institutional financing for so buyers must either have substantial funds at their disposal or look for creative financing options. Seller financing is a common occurrence in business sales. If the amount and other terms are within reason and you have recourse if the buyer defaults then you should not be too quick to simply reject an offer on this basis alone.
Again, selling a business is a process that can be more involved than a real estate sale. There can be many more deal points to consider which lends itself to creative deal making. Work with a business broker to discuss the business sale process and help you understand the transaction part of it a little more.
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