Value, like beauty, is in the eye of the beholder.
When it comes to selling your business it pays to understand that value, like beauty, it is in the eye of the beholder.
Let me give you an example.
Let’s take buyer A- The typical small business owner or Investor searching for a business to buy .
To this buyer, purchasing your business is an investment and they see your current profit as a static figure they are simple adding to their own ongoing income. This buyer is likely to offer a typical 1 , 2 or maybe 3 times your profit at the point of sale.
Buyer B-Is the strategic buyer –
This is often a competitor or maybe a business serving a similar client type with a different service or product.
Buyer B sees a far higher value than buyer A simply because they view potential profits in the future far higher.
You see as a competitor they can absorb your business and its clients, remove any duplicated costs and remove a competitor all in one go
As business in a similar field they can cross sell yours and their products to both client databases and receive far higher returns than your business is producing today.
In both these cases they will quickly leverage the investment to generate much higher profits and therefore are likely to pay considerably more to acquire your business.
The key here is understanding that buyer A is actively looking for a business and therefore traditional methods of marketing your business will only attract these buyers
Buyer B probably isn’t actively looking but would be interested if a well prepared approach is made in the correct fashion by a sales expert who understand the strategic sales process. In short if you want to attract the buyer that will pay higher prices you need to look attractive to them and have an approach that will work for both parties.
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