Home Forums Money matters Selling a Business – price v integrity

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  • #993098
    alliedib
    Member
    • Total posts: 453

    Hi everyone,

    Would be interested in your thoughts on this….

    I am doing some work with a client in a regional centre and, during a recent meeting they told me they are looking to sell their 10yo professional services business. Basically, they have 2 buyers interested (which is good) but here is the hard part – Buyer A has put in a better offer (apparently enough $$ more to be noticeable), whereas Buyer B would be seen as better for the customer base (more professional / perceived integrity – similar values to the current owners).
    Here is the issue – one half of the business is wanting to go with Buyer A (as they only get one sale chance) whereas the other half is wanting to go with Buyer B (basically so they don’t let their customers down – a good number who have been loyal to the firm since its first year).

    It got me thinking – which is the ‘right’ to go? Is it a matter of getting the best return for yourself or is it better to take a lower amount but be able to still face your old clients in the street??

    Any thoughts would be invited on this….

    Regards,

    Mark

    #1189718
    MD Clean
    Participant
    • Total posts: 308

    Wow, what a dilemma. Of course there is no correct answer so the question is unsolvable at its heart.

    The people that sold me my business would go with the low offer every time and I would lean towards that approach personally depending on the $$$ difference but it is equally valid to accept the highest offer.

    A third option, if your clients have the skills to do so is to accept the high offer but provide a longer hand over / training period to fully expose the buyer to the nuances of dealing with the client base in the best way.

    I would be honest with the low offer person and say that we have 2 offers but we like you and think you would be a great fit but… we need you to come closer to the other offer price.

    #1189719
    Dave Gillen – FS Concierge
    Keymaster
    • Total posts: 2,543
    MD Clean, post: 222613, member: 58759 wrote:
    I would be honest with the low offer person and say that we have 2 offers but we like you and think you would be a great fit but… we need you to come closer to the other offer price.

    Great comments above by [USER=58759]@MD Clean[/USER]

    If they won’t meet the other price, I would also ask them:
    Is it because you don’t have the money or because you don’t see the value in the deal? You need to know what’s stopping them so you can work it out.

    If they don’t have the money maybe you could finance the difference between the two offers. So they give you their final offer amount up front and then pay the rest over 2 years for example.

    Keep us posted!

    Dave

    Dave Gillen - Client Acquisition | Brisbane | (07) 3180 0288
    #1189720
    alliedib
    Member
    • Total posts: 453

    Thanks guys – great thoughts and both valid… I will let them know and keep you informed!

    Regards,

    Mark

    #1189721
    bb1
    Participant
    • Total posts: 4,485

    Personally I would go with the higher dollars. Ok that a bit rough on my loyal clients.

    But, you have put a lot of effort into setting up a business, and in reality you deserve top dollar when you sell it.

    plus although the perception is that one buyer has higher integrity do they really.

    Just from my industry and knowing a few people who have sold, they have seen that at the same time a percentage of the clients jump ship, not because they don’t like the new person, but because they had wanted to start doing there own thing, but didn’t want to disappoint the existing contractor. My point here is how many of the existing clients would stay with the new owner even if they have integrity, and are you going for less dollars on an assumption.

    You (Well the current owner), should be aiming for the highest dollar for the efforts put in.
    IMHO

    #1189722
    MD Clean
    Participant
    • Total posts: 308
    FS Forum Support, post: 222617, member: 49676 wrote:
    Great comments above by [USER=58759]@MD Clean[/USER]

    If they don’t have the money maybe you could finance the difference between the two offers. So they give you their final offer amount up front and then pay the rest over 2 years for example.

    Keep us posted!

    Dave

    I really like this idea Dave as both parties have skin in the game – or more skin in the game. Both sides have to show more commitment to do this sort of deal but it may not be so much about access to more money than it is about the valuation.

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