Values Perceived Differently Among Buyers
These buyers are only interested in purchasing equipment or assets (intellectual property) that can compliment their current operations. They will be shopping equipment at bargain prices; they may have little or no interest in your markets or goodwill.
|the price they will pay is the market value of your equipment and assets - which is generally priced at its replacement value|
|use this pricing strategy when you want to exit the business|
|target the sale of your business to the competition or other-like businesses in your area|
there are buyers who are interested in a particular location such as a retail intersection or logistical handling (i.e., next to the airport). They may or may not be interested in your assets, goodwill, or markets.
Sellers in this situation generally own the building and land. The buyers will either tear down or renovate your existing location.
|the perceived value is dependent on the macro-changes that are happening or expected to happen for that location|
|the price they will pay depends on retail price of similar property in the surrounding area|
|understand the potential use of your location. If your location is in a prime retail location for example, you may price your business and land at a premium|
|you should get an independent land appraisal to substantiate your price|
The seller will have established contracts/sales in a geographic location or market to a demographic group where the sales barriers are high. The buyer will have interest to move into an established market and ramp up their business quickly.
|the buyer's perceived value is dependent on the cost and time to establish a similar market or operation|
|if the barriers of entry are high, meaning that the cost to setup and capture a similar market relationships are high, then your price could be somewhat high|
|if the cost to setup a similar market is not high, then your price will be dependent on the buyer's perceived value of timing - how quickly they want to be in the market.|
|understand the cost to setup a similar market. If that cost is high, then the perceived value may be high depending on your projected market position|
|if the cost to establish a similar market is not high, then the perceived value is the strength of your documented cash flow position|
The seller will have a specialized or patented technology that cannot be replicated within a reasonable time or cost. The buyer will be an established operation that can benefit from this technology.
|in most cases, the buyer would seek to license the technology and may not be interested in buying your operations|
|the buyer's perceived value is the opportunity cost of not having the technology|
|price the business and technology together with the technology piece the greater portion of the overall value|
|the buyer may perceive the value as a great buy where they can take ownership of the technology and discontinue you as a potential hostage holder or competitor|
The seller will have a strong brand name in a defined market. The buyer will want to capitalize on the brand name to expand their marketing operations.
|the perceived value is dependent on strength of the brand name and the current operations or product line|
|the value will depend on the brand - which can be subject to different opinions - and the value of your assets and earnings|
|If you are in a position of strength - meaning that your cash flow position and brand recognition are strong - you can bump the price up.|
The seller has a business that is performing well with potential growth opportunities. The buyer will be an individual who left the corporate ranks to look for an independent business opportunity
|the buyer's perceived value is the cost to finance the business, set an annual salary for the themselves or another business manager, and maintain required capital expenditures|
|the higher your cash flow position, the greater your market value|
|price will be based on your cash flow position which can be 2-3 times over cash flow|