31 Oct Defending the Seller’s Asking Price
Business broker and expert Glen Cooper, Founder and Managing partner of Colorado Business Brokers, recently joined us for an informative webinar entitled, “Structuring the Transaction: Defending the Seller’s Asking Price” In this webinar, Cooper outlines the “four fundamental principles of how to effectively demonstrate the value of a seller client’s business, the twelve essential steps for structuring the sale, and three critical tips for staying on message.”
In this article, we will cover several of Cooper’s key points and, in the process, provide some actionable tips for how best to proceed when structuring the transaction and defending the seller’s asking price.
Telling the Story
As Cooper points out, everything that you do has an impact on the structure of the transaction. He notes that a key aspect of defending the seller’s asking price is the fact that the business broker, and the seller, are essentially telling a story. It is important to note that telling a story is about more than just being able to verbally relay the information of why a business’s value is on target.
Instead, Cooper thinks that it is necessary for you to have a written story as well. He suggests even using photos and other elements when telling a story. He states, “You must have the financial facts as well as the story of the history of the owner of the business. You take that information, interview the seller and weave together the story.”
Educating Sellers
Weaving and telling the story that defends the asking price is not your job alone. Cooper makes an important distinction, noting that the seller must be educated as to how best to present the business. In fact, Cooper goes so far as to state that it is a co-selling process where the business broker and seller are both involved.
That stated, however, he also emphasizes that the seller must be prepared for interacting with prospective buyers. He points specifically to stories where sellers made presentation errors, such as discussing the value of the business while standing next to the trash in the back of the facility. Those types of issues need to be ironed out and discussed before contact with prospective buyers.
Focus on Written Presentations
Glen Cooper feels that many business brokers and M&A advisors may shy away from crafting written presentations and materials, as many don’t know how to write or find the process difficult. But it is through written presentations that sellers gain clarity on the sales message that you have carefully created.
He notes, “Putting everything in writing is how you help train the seller as to what they should say. In this way, you both agree on the facts and what facts you wish to emphasize. Creating all of this in writing is important.”
