How to Approach the Selling Price of Your Business - VR Business Sales Blog

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Tuesday, January 26, 2010

How to Approach the Selling Price of Your Business

JoAnn Lombardi
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The topic of what the business price should be is two-pronged. On one end, sellers should never a.) Be rushed on giving a price, b.) Consider buyers to be within reason for asking about it at any point in the discussion and c.) Be realistic if they expect to complete transactions. On the other end, buyers want to know what sellers are practical when it comes down to what they want for the business.  

Different Approaches to Price
Pricing can be addressed as an overall value and then assigned to various forms of consideration such as initial purchase price, installment and contingent payments, noncompetitive and personal service agreements.  
Another approach is to determine the form and mix of the consideration components, and then define an overall package as having a particular value or price.  
Determining the Value before Giving the Asking Price
By the time you as a seller meet with prospective buyers, you should know what you want. The asking price should always be accompanied by a term sheet and analytical support. Remember that the price should not be discussed before you agree on the value of the business with your VR Business Intermediary. You also need to make sure that the buyer fits with the structure of the business.


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