Does Your Asking Price Truly Matter When You Sell a Business?

It is no great secret that sellers often aim high. The logic sellers use is simple, “I can always reduce my price.” While that is true, sellers do need to remember that if the asking price of a business for sale is initially too high, buyers won’t even take a serious look. In short, your selling price must be bound by reality and what the market will bear.

Pricing Does Matter When Selling Your Company

When an asking price of a business for sale is too high buyers will simply move on. But in the meantime, you may have lost a qualified buyer that would have been very interested at a lower price. Pricing isn’t a factor that should be played with, instead it should always be treated in as professional of a manner as possible.

Instant Millionaire? Maybe and Maybe Not

Some sellers want to become instant millionaires and sell a business for top dollar. Sometimes this is warranted and sometimes the numbers don’t support lofty business valuations. Every situation and every business is different. It pays to be realistic.

Studies have shown that there is usually about a 15% difference between what sellers want and what the market will bear. For example, when a business for sale is over $1 million, sellers usually sell for 90% of their asking price. Smaller businesses, valued under a million, usually sell for about 85% of their initial asking price. (Now, that stated, it is important to keep in mind that only data on sold businesses factors into this statistic.)

Business Brokers Help Determine an Accurate Business Valuation

A business broker has considerable expertise when it comes time to calculate a reasonable asking price for a business. They know that it is essential that they come up with a price that is fair. As a result, business brokers take many diverse issues into consideration. A few of the factors that business brokers consider are location, competition and annual sales variations.

Prospective Buyers Can’t Read Your Mind

An experienced business broker can help you determine the right value for your business and determining the right value is key. The last thing you want is to have an evaluation that is far too high as you will immediately eliminate many prospective buyers. While you may know that you are willing to negotiate and perhaps even reduce your asking price substantially, prospective buyers do not know this fact. A realistic and appropriate asking price is of paramount importance and a business broker can help guide you towards the best decision.

Market Forces Have the Ultimate Say

In the end, it is the market, not the seller, that determines the correct selling price of a business for sale. If no one is willing to pay a certain price than a given business is overpriced. That may be a brutal fact, but it is also quite true.

Copyright: Business Brokerage Press, Inc.

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M&A Business Advisors represents sellers and buyers of privately owned businesses in a wide range of industries in California and Nevada. Our services include Selling a Business, Buying a Business, Mergers & Acquisitions, Business Sales and Acquisitions, Valuations, Opinion of Value, SBA Finance and Business Consulting. Sell your Business, Buy a Business, How do I determine the Value of a Business, How do I Sell my Business Confidentially, What is a Safe Way to Sell my Business, How long does it take to Sell a Business, How do I Sell a Business in California, How do I Sell a Business in Nevada, Search Businesses for sale. We represent Sellers and Buyers in Southern California, Los Angeles County, Orange County, Ventura County, Santa Barbara County, Kern County, San Bernardino County, Riverside County, San Diego County, Los Angeles, Torrance, Gardena, South Bay, San Fernando Valley, San Gabriel, Upland, Woodland Hills, Chatsworth, North Hollywood, Van Nuys, Burbank, Glendale, Pasadena, Santa Clarita, Palmdale, Thousand Oaks, Ventura, Camarillo, Anaheim, Irvine, Santa Ana, Huntington Beach, Newport Beach, Fullerton, Laguna Beach, Aliso Viejo, Rancho Santa Margarita, Orange, Costa Mesa, Brea, Loa Alamitos, Mission Viejo, Fountain valley, San Clemente, Northern California, San Jose, San Francisco, Oakland, San Ramon, Napa, Sacramento, Nevada, Northern Nevada, Southern Nevada, Reno, Carson City, Tahoe, Las Vegas.