The subject of selling companies is inundated with information and instruction, but unfortunately, a significant portion of it lacks real-world deal-making experience. Consequently, it becomes challenging for business owners to make informed decisions and maximise their returns on the most important sale they will ever make.
At INSIGHT, we firmly believe that selling a company requires a proactive sales and marketing approach, therefore over the next eight blog posts we are taking each of the eight principles that stem from that conviction. These principles are not just theoretical but have been repeatedly tested and validated over our extensive history of selling companies in a significant number of industries.
Principle Four - Choice is King
The most critical factor in selling a company is having multiple buyers to choose from. This factor surpasses all other considerations.
The presence of competitive bidding environment has a significant impact not only on increasing the price but also on maintaining it. If a buyer is aware that there are other buyers vying for the same company, they will be less likely to try and negotiate a lower price. This practice of reducing the price is commonly known as "price chipping". However, establishing competition among buyers is often the most overlooked aspect of traditional sales.
Moreover, having multiple buyers to choose from also expedites the sale process and gives you greater control over the terms of the deal. It is important to note that whoever has the ability to establish a choice of buyers holds the greatest control over the negotiation.
Therefore, lacking the option to choose can be detrimental to your negotiating power.
For further information you can read our guidebook:
Comments