Sell Your Business for an Outrageous Price by Kevin Short
Author:Kevin Short
Language: eng
Format: mobi
ISBN: 9780814434727
Publisher: American Management Association, AMACOM Division
Published: 0101-01-01T00:00:00+00:00
CHAPTER 10
Pillar IV: The Outrageous Adviser
So far, we’ve assembled the following ingredients, or pillars, for the Outrageous Price Process:
1. A successful company with a competitive advantage (the ability to do or make something better or more cheaply than all of its competitors) and a direct relationship between the seller’s competitive advantage and a buyer’s need that may be able to be leveraged to persuade the buyer to pay handsomely to acquire the company from the seller
2. A buyer with enough financial firepower to pay an Outrageous Price in order to purchase significant future gain or avoid significant pain
3. An owner who has the ability to trust his or her adviser, the guts and self-discipline to ride the roller coaster all the way to the end, and a certain flair for playing a role
We now add to our recipe another key ingredient, Pillar IV, a transaction adviser:
With experience creating successful strategies to get Outrageous Prices for sellers
With the intelligence and analytical skills to play the multilevel chess game that the Outrageous Price Process demands
Who has the highly developed people skills to intuitively understand and predict behavior
Before we look at each of these characteristics more closely, a word to those owners who may be tempted to orchestrate the sale of their companies without assistance: Don’t do it!
I am amazed at the number of business owners who attempt to sell their companies without outside assistance yet would never dream of designing a plant, an employee incentive plan, or a national marketing program without the assistance of skilled professionals. These same go-it-alone owners will use a real estate agent to sell their homes but will sell their companies to the competitor that has offered a “reasonable” market price. Other owners would stubbornly rather shut their doors than hire a professional to help them sell the most valuable asset they own.
Selling a company is a complex financial and legal transaction and therefore requires the services of accountants and attorneys. These professionals, however, are not generally trained in how to value a company for sale under current market conditions, set a sale price, find and evaluate buyers, or manage the complex negotiations required to get an owner the best possible price. For that, owners look to transaction intermediaries and must choose either a business broker or an investment banker.
The primary differences between a business broker and an investment banker are (1) business brokers do not work in the same value arena as investment bankers and (2) the two disciplines employ very different sale processes.
BUSINESS BROKERS
Business brokers typically represent companies worth less than $5 million. They generally hold real estate licenses and do not orchestrate either competitive auctions or Outrageous Price sales. These intermediaries broadcast “for sale” announcements far and wide and, like real estate agents, direct interested parties to any one of their listings.
If your company is in the $5 million value range and you think that it is a candidate for either a competitive auction or the Outrageous Price Process, you should interview investment bankers.
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