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There Is More To It Than Just Price

4/15/2014

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Too many times buyers focus on price and only price. Of course this is a major factor, but there are other items to consider.  We have seen many instances where price was not the deciding issue in the successful sell of a business. A business intermediary really understands the issues and can lead the buyer and seller to a successful resolution.

Here are a few examples:

• Time can be a major factor.  In one case the seller needed the money for some medical expenses.  The losing buyer wanted a 60 day due diligence period and requested closing another 60 days after due diligence. The winning buyer performed the same due diligence, but completed it within 15 days and closed within 30 says after the date of his offer.

• One seller was more of an absentee owner and hadn't kept up the physical office. Files were everywhere, it hadn't been cleaned in a couple of months, and everything seemed very disorganized including the employees. One potential buyer walked in and saw all of this then factored it into his offering price.  The winning buyer evaluated the situation and realized the agency had very few, if any, walk-in clients.  He also looked around and noticed he could save money by renting another space.  

• A seller planned on staying with the agency for another three years and his key employees wanted some future upside and reassurance that the current pay structure wouldn't change.  The losing buyer made a full offer with normal compensation to these key employees and a simple salary to the owner.  The winning buyer offered partial ownership to the key employees and a tiered commission structure rewarding producers for additional business. The seller, who was still very active in the agency, was offered a consulting fee plus the same tiered commission structure. 



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    Jeremy Hovater

    CEO
    Sunset Insurance Group

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