Getting To A Price


Image by Martin Deutsch via Flickr

So someone calls you up and says that they want to buy your company.

You take a deep breath and then say, let’s talk…

There are a lot of wrinkles in selling your business. The main one is that most people are so unused to the concept that they stumble at the first fence….

Imagine this: its actually no different to selling your house.

So you are sitting in your lounge room one day. There is a knock at the door. You walk to the door and open it, hoping its not going to be someone wanting to sign you up for Watchtower magazine. Its a stranger. The stranger says, “Hey, I was walking past your house and I wondered if it might be for sale”.

So how do you respond? Hopefully you don’t immediately start trying to sell it – saying “well you know what, it has a fabulous pool out the back, and the water feature in the rock garden is just wonderful…. etc. etc.”

If you did, the person at the front door would be wondering what he had walked himself into.

What you do surely is this: You say, “wow, that is amazing. We don’t have the house on the market actually. You would probably have noticed that there is no signage offering the house. However, you know, everything is ultimately for sale, so why don’t you just tell me what you want to offer, and we will talk about it rationally and if it seems like a fair price, given the fact that we don’t actually want to sell, don’t need the money, and don’t want to leave the neighbourhood, we might consider taking it. But there is a lot of work to get through before we get to that….

The fundamentals of selling a business to someone who comes knocking is that you have to assume that they are not going to pay you with cash. They are going to want to do a deal with scrip.

In that case you are going to travel with the parent/acquiring company for a while before you get to a liquidity event. All that is workable. The big issue is how you play the game of being the prey. Its a subtle role to play!

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