Breaking It Down: The Eighth of the Ten Commandments of Business Acquisitions
Our Ten Commandments of Business Acquisitions has been so popular that we have decided to break it down. To briefly discuss each of the Ten Commandments, and its import and impact.
The eighth commandment: “Offer a fair price .”
A prospective buyer should attempt at the outset to offer a fair price for the target business.
It makes no sense to insult the owner/ seller by making an offer for the business that is unconscionably low.
While it is advisable to leave “room to move” when making an offer and negotiating for the purchase of a business, if the prospective buyer low balls the offer, the owner/ seller might reject him or her or it as a prospective buyer, concluding that a prospective buyer who makes a low ball offer is not serious and is not to be taken seriously.
Relatively few acquisition opportunities can be “stolen” and in general an acquisition opportunity is not worth pursuing unless you are prepared to offer a purchase price that is within the range of reasonableness.
Conversely, a prospective buyer who offers an inflated price, thinking he or she or it can later whittle it away, may find that he or she or it cannot get the anticipated price concessions and therefore ends up overpaying for the business. At the very least, aggressively re-negotiating the price after a letter of intent is signed will poison the atmosphere, undermine the acquisition momentum and might likely kill the deal altogether.
It is important to develop a relationship of confidence and trust with the owner/ seller, and a great way to accomplish that is to start by making a fair offer. There is no substitute for honestly and integrity in any business negotiation.
Buying & Selling a Business – Value Drivers & Detractors
March 20 @ 7:30 am – 9:00 am
Cleveland Racquet Club
CFE Speaker Panel on March 20th, 2020 – Buying & Selling a Business featuring Mike Trabert, Wayne Foley, Brian Jeckering & John Lane.
Selling a Privately Held Business, or Buying It? Hear from our panel — which includes notably two CFE members who were recent sellers and two seasoned business transaction professionals — about the real-life process and the value-drivers and detractors.
John Lane of Inglewood Associates will be our moderator.
Panelists will include:
- MIKE TRABERT of Marcum (formerly Skoda Minotti)
- WAYNE FOLEY of Kyntronics (formerly President & CEO of Midwest Precision Holdings Inc, which recently sold to Tribus)
- BRIAN JECKERING, former President and CEO at Polychem Corp., which sold to The Sterling Group in 2019
Our most recent event was a sellout so get your RSVP in asap!
Quotes of the Day
I believe that anyone can conquer fear by doing the things he fears to do provided he keeps doing them until he gets a record of successful experience behind him.”~ Eleanor Roosevelt
Shrinking away from death is something unhealthy and abnormal which robs the second half of life of its purpose.”~ Carl Jung