I am often called by someone I have never spoken to before, but who has obviously done a Google search looking for companies or people like Suitegum. Long story short; the caller would normally need to sell his business in the next two weeks – by the end of the month, actually. I give them the courtesy of going through the usual questions and basic investigations with them.
One of our issues which is not negotiable before agreeing on terms of engagement, is that we insist on doing a proper valuation of each and every business we take on to sell, before we try to do so. The reasons for this insistence are twofold:
- It gives us an opportunity to discover up front what skeletons lurk within the business; it gives us an opportunity to bring ourselves up to speed with things the way they are, rather than the way that sellers would have us believe they are. There is nothing worse than working (on risk) for some weeks, only to discover that we have been wasting our time.
- It gives us an opportunity to canvas the real value of the business, and not simply the lowest fall back option of the seller – either too high or too low.
So when the desperate seller calls, I apprised him of our standards, to which he will often reply: “I know the value of my business, and it is not negotiable”. That is never a good start, but I press on with a few questions designed to shine some light on the attitude.
Why, so often, the sudden urgency to sell something which someone has been running for only nine months? And how is he so sure of his value after only nine months, anyway?
If you are interested in delving a little further into the myths and realities of business valuation, take a few minutes to read this article.
Mark