As an owner, you are likely to have multiple opportunities to sell your business. When you receive an offer, how do decide whether or not to accept it? Should you negotiate for a better deal? Should you find a different buyer altogether? Should you do nothing? Before answering these questions, it helps to put the offer into proper perspective.
First, consider the offer in the context of the market. Second, consider the offer in the context of your goals. A market rate offer that meets your personal and financial goals is one worthy of careful consideration.
Is this a market rate offer? This can only be determined by obtaining multiple offers from qualified buyers and comparing them. Valuing a privately-held company is tricky, and it cannot be done in a vacuum. Rules of thumb and “comparable” valuations provide valuation pointers, but they do not determine the true market value of a business. A well planned sale process produces multiple offers within a short period of time and enables objective evaluation of each. Without multiple offers, it is impossible to know whether the valuation and terms offered are fair for your business. Read more »