Benchmark Business Group

Handling the Lowball Offer

July 16, 2018

You're offering how much for my business?!

When you put your business on the market it's not unusual to receive at least one offer that is much lower than you are willing to consider. Some buyers start low, hoping for a yes, then begin to negotiate price and terms with the seller. While extremely low offers can seem so ridiculous that you may initially feel insulted - they can be the start of a rewarding negotiation.
For sellers, it's essential not to take low-ball offers personally. Remember the sellers mantra: it's not about me. It's not personal. It's business. A low-ball offer doesn't mean a buyer is saying your business is only worth what they're offering, they're just saying that's how much they'd love to pay for it!
If the interested buyer has gone through a buyer qualification procesprior to seeing your confidential business information, you know they can financially afford to purchase your business. If they have the capability to purchase, and the interest to begin discussing a deal, don't let your pride interfere with the opportunity to learn more about their interest.
Engage the buyer in conversation to find out how they arrived at their price. Find out what attracted them to your business, learn their purchase motivations, be curious about their concerns and be open to what they consider to be the flaws in your business.
The process of selling a business takes a lot of back and forth between buyers and sellers. There are a multitude of details to hammer out and gain agreement on. Having a productive relationship with the people buying your business leads to cordial negotiations and getting a deal to the closing table. Engaging with interested buyers, even those with low-ball offers, will help you see your business through the buyer's glasses. It's an opportunity to understand the rationale they use to assess your business, answer their questions, and learn more about their fit for owning your business.
The more you can understand a buyer's motivations, fears and logic, the better prepared you will be to negotiate a win/win deal. If you simply dismiss low-ball offers without exploring them, you'll miss the opportunity to be more prepared to engage with other buyers, and you may miss the opportunity to sell your business to a willing buyer, for a win/win price!

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