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Archive for 'Pricing the Business' Category

Raising Prices Prior to Listing the Business for Sale Increases the Sale Price

By Hoke - Last updated: Wednesday, January 29, 2014

                [box] If you can, raising your product prices before the sale is a great way to increase the discretionary income and therefore the sales value of the business. The prices should be raised with enough time (2-3 months) that any customer reaction because of the price changes […]

What is Due Diligence?

By Hoke - Last updated: Monday, September 3, 2012

Due Diligence part of the sale process when the seller opens all aspects of the business to the buyer. In essence this is where the seller must convince the buyer that the business performs and is as represented. This convincing is done mostly via providing historical documentation and buyer observation. The buyer has an opportunity […]

Pricing the Potential of a Business

By Hoke - Last updated: Saturday, September 1, 2012

I have a saying: The buyer buys a business that shows potential but pays for history.” If the buyer does not see growth potential, the buyer will usually not buy it. The buyer may see a potential but doesn’t let anyone know. As an example the buyer may be a marketing expert and sees an […]

Starting With A Higher Ask Price

By Hoke - Last updated: Thursday, August 5, 2010

If the “start with a higher price and see what happens” approach is taken, then the Seller and Business Broker should maintain close communication. The Business Broker should be providing Buyer comment feedback to the Seller. Adjustments may need to be made on a timely basis to prevent the business listing from becoming “stale”. This […]

Buyers Are An Informed Group

By Hoke - Last updated: Thursday, August 5, 2010

In today’s Internet age, the typical Business Buyer is well informed. They have been looking at tens or hundreds of businesses for sale and understand more about Business Valuation than most Business Sellers who have not conducted such an intense investigation prior to deciding to put their business on the market. The typical Buyer intuitively […]

How Much Will The Ask Price Be Discounted During Negotiations?

By Hoke - Last updated: Sunday, August 1, 2010

This is really a case-by-case matter. The Published Average for Business Acquisition Sell Price as a Percent of Ask Price is approximately 85 – 88 Percent.

I can’t reduce my price because I will lose money.

By Hoke - Last updated: Sunday, August 1, 2010

A too-high price that doesn’t sell is an illusion that can end poorly if the Business Seller really must sell.

How important is the Initial Ask Price?

By Hoke - Last updated: Sunday, August 1, 2010

Getting the Initial Ask Price right is a key to maximizing sales value. If the initial price is too high, the business stays on the market too long creating doubt with Business Buyers and weakening the Business Seller’s negotiating position. If the Ask Price is too low, the business may sell quicker, leaving some of […]

Are Ask Prices On The Internet An Accurate Means To Gauge The Market?

By Hoke - Last updated: Thursday, July 22, 2010

Most Ask Prices on the Internet are too high. Because they do not sell, overpriced businesses are perpetually displayed. They influence other Business Sellers who look on the Internet to price their business creating an ongoing parade of businesses that rarely sell. Further compounding too-high pricing some Business Brokers look to the Business Seller (who […]

My business makes a great living yet shows little profit.

By Hoke - Last updated: Thursday, July 22, 2010

A skilled Accountant will minimize Income and therefore taxes. A skilled Business Broker will be able to professionally recast the Financial Statements and Tax Returns to maximize Income and therefore business valuation.  As an example, Interest and Depreciation increase Discretionary Income for the purpose of a Financial Statement Recast. An understated Financial Statement Recast can […]