Today’s Sellers Have Options by Scott Bushkie, CBI, M&AMI

We’re in the middle of negotiations on a deal with four to five competing buyers offering wide variety of values and options. Some want to lease the real estate, others want to buy it. Some want the owner to stay on, others don’t.

It’ll be interesting to see which one the seller chooses. From experience, I can tell you it doesn’t always come down to price.

Years ago we sold a company where the seller had his pick of two offers about $1 million apart. The higher bidder planned to move the facility overseas, but the lower buyer planned to keep it where it was.   Both offers came in above the seller’s expectations, and he felt he could afford to be choosy. He took the lower offer and protected his employee’s jobs.

Another time we had a company in a hot industry get 11 indications of interest. After we picked a shortlist of four buyers, one of the big guys at the table threw out a large number with very little due diligence behind it.

The seller chose the buyer who offered $1.2 million less because they showed more serious intent, and were therefore more likely to follow-through to the closing table, and because more than 90 percent of the offer came as cash at close.

The point is, these sellers had options, and that meant they had more control over the sale. Selling your business is a more comfortable process when you have more people sitting at the table.

You still can’t get crazy and think ridiculous values, but it allows you to put together a better deal that fits you. You might get some of the big items and most likely will end up getting some of the little things you most likely would not get in one-on-one negotiations.

Beyond price and deal structure, you can consider culture, personality, employee retention, real estate issues, your own transition time frame after the sale and more.

In selling your business, you don’t get what you deserve, you get what you negotiate. In a market like today’s, which is a seller’s market, you have a good chance of bringing multiple buyers to the table.

We’re seeing more money and more buyers chasing good quality deals right now. So much so, for the first time we are offering a multiple-buyer-guarantee for all companies with $500,000 or more in EBITDA. That’s how strong the market is.

Again, at the end of the day, you don’t get what you deserve, you get what you negotiate.  And negotiating is a whole lot easier when you have multiple offers to choose from.

Scott Bushkie is Principal of Cornerstone Business Services. To request a book (at no cost) with advice on the exit planning process contact Scott at (888) 829.9061 or[email protected].

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A thought-leader in the industry, Scott developed the Cornerstone Process to offer investment banking M&A-level services to the lower middle market. The result is a closing ratio that’s more than double the national average.