We see this day in and day out. An owner calls and says he’s ready to retire. He wants to know what is his business worth? We complete the valuation and assure him that there are buyers out there who have an interest in his type of operation. He says he wants to think this over for a couple days. It is a big decision. Weeks later, he still hasn’t called back. What’s going on? Simple. He’s afraid. Often times, this is the only thing that he knows and has known for years. Many times, owners that are selling were the original founders of their business and it is now 20, 30, 40 and maybe even 50 years out. In some situations it could be more than 50 years and today’s owner is a second or third generation proprietor. There are no children or grandchildren that are interested. In short, the business has become like their child.
In this situation, emotions will be running high. The owner will have such thoughts as: ‘ I can’t just give this away,’ ‘ what will happen to it after I leave,’ or ‘all these employees rely on me!’ This is all normal. It is and will be difficult for many owners to walk away from what they personally have built over time.
An irony in this situation is that a typical buyer will not be concerned about any of those issues of the owner. The buyer on the other hand, is forward thinking and forward looking. They are evaluating the potential of the business and considering all the changes they would make when they assume ownership. The buyer is not “personally attached” or invested in the operation like the seller.
Can you see where all of this leads into a potential negotiation? We have a buyer reluctant to let go for fear that everything in the business will change, negotiating with a buyer who, may very well wish to make changes. The business broker who is bringing the two together must now bring some armchair psychology to the situation. The fears of the owner must be addressed while reassuring the buyer that things can be worked out. Too many times we have seen the buyer’s impatience kick in, because the seller was dragging their feet in the process, unable to overcome their anxiety. So the whole deal falls apart.
If you are a seller who’s been in business a long time, you will need to be emotionally ready when you pull the trigger on placing your business up for sale. Buyers are not sympathetic. They are shopping and looking for businesses that fit their criteria. If you are not ready emotionally and ready to respond, they will move on and it will take a long time to sell your business.