Jason’s Powder Coating Business Sells
One of the first questions we got asked by Jason when he contacted Bonza about selling his powder coating business was “Is my business saleable?”. This is the most common question we get asked and the simple answer is yes, it just comes down to price.
Jason started his business over 20 years ago and over that time had built a highly successful and well regarded name for himself in the industry. He had a price in mind and was ready to sell as soon as possible but was concerned about whether that was possible.
Businesses can become challenging to sell for several reasons—an unattractive lease location or poor lease terms; bad record-keeping or even low motivation from the seller to see the deal through. But ultimately, the most common culprit in a difficult deal is unrealistic pricing expectations.
Many sellers arrive at a final asking price without an appraisal. They can essentially pick a number out of thin air or agree on their price after receiving advice from an unfamiliar third party. At Bonza, we always recommend getting an accurate appraisal prior to listing the business even though the final asking price is always the seller’s decision.
We advised Jason to do this for his powder coating business and during the process we assessed his last 3 years of financials, as well as current projections. We then had an honest conversation about what these figures likely mean for the business’s potential sale value and explained that ultimately the market determines the business’s sale price. The brokers at Bonza are mindful of various market forces and know that the winds may shift in ways you can’t always anticipate.
At Bonza, we also understand that business owners who have invested heavily in their company want top dollar for their work, so they often decide to list their business at a value based on where they hope profits will take them (potential opportunity), what it was worth before the downturn, or how they value the work they’ve done put into the business.
Jason decided to list his business for a price that he would be happy with, but it was slightly higher than what was advised by the broker. This was his choice, and we were happy to work towards that price goal. The best deals happen when the strategic interests of buyer and seller are aligned. So, understanding Jason’s driving force helped our marketing team and the broker to align him with the right buyer, and potentially increase the business’s value in the meantime. The brokers at Bonza are skilled at working to develop a strong rapport with the buyer and seller. Trust matters, and buyers are sometimes willing to pay more to sellers they trust and like.
Our marketing worked perfectly, and Jason’s buyer contacted Bonza within weeks of the business being listed. When an owner lists their business for their ideal price, it has the potential to scare off buyers. But thankfully, like in this case, buyers encounter these high prices with the hope to talk down and negotiate a price that aligns with their position. Our brokers will often tell sellers that if a buyer attempts to talk them down during negotiations, maintain an open mind and consider why the buyer might not want to pay the full asking price.
Buyers want to see the business’s worth represented in hard numbers. Pricing considerations must be supported by a clear and thoughtful analysis of value. After the buyer makes an offer, both parties must collaborate to reach an agreement. Everything is subject to negotiation. Furthermore, non-monetary terms may have a greater impact on your overall profit than the sale price.
Educating Jason to understand the key value drivers empowered him to make intelligent decisions, he was less likely to trigger defensiveness and frustration which evidently allowed him to be happy to agree to an offered price that was the exact value that was originally advised to him during the initial appraisal from Bonza. After 3 short months, Jason had sold his business and was able to take the well deserved break that he had longed for.
To ensure you achieve a successful business sale in the shortest timeframe possible, we would always recommend seeking pricing guidance through our Bonza business appraisal process and setting realistic pricing expectations early. Contact us today to find out how much your business could sell for.
