Negotiating the Price Gap Between Buyers and Sellers

The terms of the deal are extremely important to both parties involved in the transaction. Many times the buyers and sellers, and their advisors, are in agreement with all the terms of the transaction, except for the price. Although the variance on price may seem to be a "deal killer", the price gap can often be resolved so that both parties can move forward to complete the transaction.

Listed below are some suggestions on how to bridge the price gap.

• If the real estate was originally included in the purchase price, the seller may choose to rent the premises to the acquirer rather than sell it outright.
• The purchaser can acquire less than 100% of the company initially and have the option to buy the remaining interest in the future.
• A subsidiary can be created for the fastest growing portion of hte business being acquired.
• A royalty can be structured based on revenue, gross margins, EBIT, or EBITDA.
• Certain assets, such as automobiles or non-business-related real estate, can be carved out of the sale to reduce the actual purchase price.

Although the above suggestions will not solve all of the pricing gap problems, they may lead the participants in the necessary direction to resolve them. The ability to structure successful transactions that satisfy both buyer and seller requires an immense amount of time, skill, experience and most of all - imagination.

The Hidden Values in Your Business

Surveys have shown that a majority of business owners have no idea what their business is worth, that they have a majority of their net worth tied up in their business, and that they do not have an exit strategy. A business broker professional is a good person to call on to get an idea of what the business might sell for in the marketplace.

Certainly, the financials carry a lot of weight in figuring what a particular business will bring in the marketplace. However, a professional business broker can also tell you about those hidden values your business most likely possesses. It's these hidden values that often capture the interest of buyers and make a business more valuable than what the numbers suggest. Keep them in mind when placing a price on your business, and make sure that a prospective buyer is made aware of them. They might be called the non-financial value of the business.

To learn about the hidden values in more detail... click here.