Using Valuations and Bundling for Optimal Effect

Using Valuations and Bundling for Optimal Effect

In this article, we will continue our exploration of Sheila Darby’s BBP webinar, “Business Valuation Mastery: Reports, Revenue and Results.” You can find the first article in this series here. One of the goals of this presentation was to help business brokers and M&A advisors to learn more about business valuations and give the absolute best guidance to their clients. Let’s take a look at some of Darby’s key points.

Why Bundle Services

Darby believes that bundling will help you to stand out (and stand above) the crowd. Additionally, she believes that by bundling, providing valuations, and building a strong support team of proven experts, such as accountants and lawyers, you can also justify higher fees.

Through bundling, clients receive certainty and “de-risk the entire process”, as part of the client’s bundle might be a certified appraiser conducting an appraisal, or a master analyst and financial forensics experts undertaking a quality earnings report, as well as due diligence. In short, bundling together the right services can be an enormously powerful approach for business brokers and M&A advisors looking to rise above the crowd.

Clients Get What They Pay For

She suggests that business brokers point out to their clients that they “get what they pay for.” You should remind your clients that they only sell their business once. For the vast majority of small business owners, selling a business is truly a once-in-a-lifetime opportunity.

The analogy she uses is to point out that many business owners would not hesitate to annually pay a tax professional thousands of dollars to prepare their taxes. Considering the importance of selling a business, clients should want to pay a professional business broker, as well as supporting experts in their respective fields, for their recommendation and guidance.

Bringing in a Professional Appraiser

You should also be sure to highlight the benefits of a professional appraiser. A free opinion or valuation is almost certainly going to lack the depth and accuracy of a professional valuation prepared by a certified appraiser. Again, clients should be reminded that they will get what they pay for and adjust accordingly.

Refunds on Upfront Costs

Another of Darby’s recommendations is that you should offer to refund upfront costs from commissions. She believes that this encourages valuations, as it limits hesitation to invest upfront in the valuation report. Additionally, offering to refund upfront costs clearly shows considerable confidence. She notes, “by offering a refund tied to the commission, you’re expressing confidence in your ability to deliver your service and show you’re willing to invest in the client’s success.

Finally, Darby is confident that this approach will lead to higher conversion rates as clients “may be more inclined to sign a listing agreement when they know they’ll receive a refund on the portion of their initial investment.”

The way that you approach your clients and the services that you offer will do wonders in shaping your clients’ perceptions. Business brokers and M&A advisors should be eager to highlight why they are different and why their services have tremendous value.