4 Reasons Why Most Business Transactions Are About More Than Price
Selling a business is rarely simple. But selling one that you built from the ground up can feel particularly nuanced. Valuation is certainly a critical part of the selling process, but it isn’t the end of the story. There are other elements that factor into a sale beyond the final sale price.
A critical part of valuing any business is putting a number to each of its assets. Regardless of how you “value” the people in your organization, for many owners, they feel like family. You care what happens to them after the sale – will they continue to have jobs? Be able to stay in the same location? Be offered appropriate severance or relocation packages? Those elements will likely factor into a selling decision, regardless of how they fit into the overall valuation of the business.
2. Community connections
Some organizations have deep roots in their communities. Every owner contemplating a sale needs to weigh the pros and cons of selling to a buyer who might move the business, or part of the business, to a new location. How would that affect your community? How community factors into a decision to sell is a very personal choice.
3. Intangible assets
An intangible asset is a business asset which has no material substance. For example:
– Intellectual property
– Customer relationships
– Trade secrets, brand recognition, and proprietary business processes
– Location-related assets like land, water, and mineral rights
Some sellers have strong feelings about how a potential buyer should leverage specific intangible assets (e.g. maintaining certain customer relationships or location rights).
Finally, what all of these reasons come down to is the buyers’ intention. While almost impossible to put a number to, sellers need to think about whether or not the buyers’ intention, or what they plan to do with the business, plays a role in their decision to sell. Some sellers only want the largest final number, while others need the peace of mind of knowing that the new owners’ intentions are similar to their own.
Whether you want to “Take your money and walk away” or hope for a buyer who will align more closely with your vision for the business, we encourage you to find a partner that supports your goals and priorities. Symmetrical assists Middle Market companies strategically assess their options and prepare for big transitions. If you are curious about what options you may have when planning to exit your business, please contact us for a confidential discussion.