Introduction - Selling Your Business
When a potential buyer approaches a business owner directly
about acquiring their company, it might initially seem like an exciting opportunity. However, this situation often harbours significant disadvantages for the unsuspecting seller.
The playing field in such negotiations is rarely even, with the buyer almost always holding the upper hand.
The Mismatch in Experience - Selling Your Business
In most cases, the buyer is an experienced player in the field of mergers and acquisitions.
They likely have a history of buying businesses and possibly selling them too. Their experience spans numerous discussions with various potential sellers, giving them a robust toolkit of strategies and tactics.
Conversely, during this initial approach, the typical seller is stepping into the M&A arena for the first time. Their business selling experience might be limited to a few informal conversations.
Even basic terms like EBITDA might still be concepts they are grappling to understand fully.
The Consequences of a Skewed Dynamic - Selling Your Business
This disparity in experience means that throughout the negotiation process, the buyer is better prepared, better resourced, and has a broader selection of potential businesses to consider.
This leverage allows the buyer to steer the negotiations, often resulting in a sale that is less than favourable for the seller. The business is likely to be sold for a value that is lower than its potential and under terms that are more advantageous to the buyer.
Why a Broker is Essential for Sellers - Selling Your Business
Engaging with a buyer directly, especially without the guidance of a skilled broker, can be akin to entering a game where the rules are not just unknown but also tilted against you.
A broker’s role is crucial in levelling the playing field. As sell-side representatives, our job is not just about finding any buyer; it’s about finding the right buyers who bring serious offers to the table.
Through meticulous research and negotiation, we commit numerous hours to ensure that we secure the best possible deal for our clients. Our presence in the negotiation process can often frustrate buyers, particularly those accustomed to encountering sellers who lack representation.
A skilled broker blocks low-ball offers and terms that don’t serve the seller’s best interest, preventing buyers from securing those "unicorn deals" they hope for.
Conclusion - Selling Your Business
While there are exceptions to every rule, our philosophy at Think Acquisition is to consistently represent the seller, the most underrepresented party in the deal. We pride ourselves on tipping the scales in favour of our clients, ensuring they receive the maximum value for their business.
If you’re considering selling your business or if you're a buyer in the property services sector looking to negotiate, think about reaching out. Let’s ensure your next big step is taken on a level playing field.
Contact our team today
T: 02920 025 852
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