Throughout the web-site, we talk extensively about confidentiality, full disclosure and fair market value, each which are central in our brokerage of a business buy/sell arrangement.
Some sellers will want an unrealistic windfall price for their business and some will even expect a serious offer before disclosing any material information to the buyer. On the other hand, some buyers will want to steal the business and some will expect to receive material information without providing any. These expectations are unreasonable and unlikely. Both parties should each be prepared to provide full disclosure over time, both should be prepared to conduct diligence over time, and both should be prepared to find and deal at fair market value. If either party is not, a sale/purchase will probably not occur.
Fair Market Value and Full Disclosure is “the amount at which a business will change hands” …
- from a seller who is motivated but not compelled to sell,
- to a buyer who is motivated but not compelled to buy,
- under terms and conditions acceptable to both parties,
- when both have possession and understanding of the relevant facts.
Buying a business will require the agreement of buyer and seller on a number of issues, not the least of which will be ‘price.’ But often, price, and all other discussion is preempted by an ‘impasse’ over disclosure, when a buyer wants access to confidential information that the seller is unwilling to divulge, … at least not yet.
As a buyer, you’ll want information just to determine whether the business holds any real interest, while often, the seller will NOT want to disclose that information until certain you are in fact interested and capable. And, while the problem is generally not so much about disclosure, as it is about what and when, real opportunities are missed by both sides, for reasons of uncertainty. The seller is not certain the ‘buyer is really a buyer’ and not just a ‘looker;’ and maybe someone who will cause trouble.
Our goal will be to facilitate the realistic objectives of both sides, with regard to these opening issues as well as others that will be encountered throughout the buying/selling process. In this Buy a Business section, we will attempt to disclose to you, exactly how we would intend to unfold the process and what you can expect from us business brokers.