Setting an asking price when selling a larger middle market business is easy. Experienced merger and acquisition experts, business brokers, and business intermediaries will tell you larger businesses likely to be purchased by sophisticated investors, private equity groups and large corporations do not need to have an asking price. These business buyers when buying middle market businesses will calculate what the business is worth to them and put in an offer. If you give an asking price to these prospects, you’ll simply cap your offers.
For a few businesses that size-wise and market-wise fall between larger sophisticated buyers and the corporate refugee, you can try to market to larger buyers first without a price and then attach a price when it comes time to shift to smaller, less sophisticated buyers.
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Still it is important to have realistically estimated a sales value of the business before the business sales process. You will need this information to negotiate with prospects and obtain the best deal. For this you must know the likely market value. Knowing the likely sales price will also allow you to determine if the likely outcome from the business sales process will meet your needs in terms of sales price, likely buyers, tax liabilities and more. Just remember the best professional estimate of your business’s value is not the same as several buyers with checks. That is the real measure of value in any given market.
Always estimate the value of your business. For larger middle market businesses do not put an “asking price” on your business when you go to sell your business.
Gregory R. Caruso, JD, CPA, CVA
Harvest Business Advisors