Seller Misconceptions and Expectations

Seller Misconceptions and Expectations

Last week’s Business Advisory Reboot webinar featured renowned Canadian business intermediary and business broker, Doug Robbins. Robbins founded Robbinex, Inc in 1974. Over the decades, the company has completed 1000+ assignments which included advising clients on everything from mergers and acquisitions to refinancing, consulting and more. Robbinex has completed more than 400 business sales and has invested in 32 businesses.

Doug Robbins brings a tremendous wealth of knowledge and information on the topic of buying and selling businesses. To listen to the entire webinar, click here. In this informative session, Robbins shares his workshop “Six Ways Buyers Value a Business” created by Robbinex. ®

In this article, we’ll focus on some of the Robbins’ top points and tips that he has learned over his long and highly distinguished career. A key point that Robbins feels should receive great emphasis, and one that all business brokers and advisors should keep in mind, is that sellers tend to have unrealistic expectation regarding what their businesses are worth.

These misconceptions arise from a range of sources. In some cases, it is a lack of education regarding the market and/or input from associates and friends. In other situations, sellers are comparing their business to others, which may or may not be significantly different. The end result of these influencing factors is that business owners will often enter into the process of selling their business with a range of beliefs and expectations that complicate the process.

The resulting inaccurate ideas mean that business brokers often find themselves with a considerable mountain to climb. Or as Robbins states, a clients’ “golfing buddy probably knows more about valuing a business than your accountant does.” You can imagine the scope of the problems that this scenario can create.

That’s why Robbins advises that often the first hurdle that brokers and M&A advisors must overcome is psychological. Robbins points out that no real progress can be made with any client until he or she is actually listening. Sellers must be made aware of the reality of their situation and be willing to potentially adapt accordingly. Ultimately, it is your job to dispel illusions, many of which have been firmly engrained over many years or even decades. This will allow true progress to finally take place.

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