It’s no fun telling a songwriter his song is bad. Telling an author her novel won’t sell takes nerves of steel. Telling a business owner his business is overvalued is no way to make a friend, much less gain a client.

Marvin (not his real name) was flat P-O’ed at me. When I told him how a buyer would look at his business, he told me in no uncertain terms he was not going to hire me because I didn’t know the market and didn’t appreciate how hard he’d worked over the years.

After almost 30 years of buying and selling businesses, I understand that it’s common for a business owner to have an unrealistic valuation expectation. This disconnect can be exacerbated by a business broker who is not honest with the business owner. Too many business brokers will tell an owner what the owner wants to hear about his valuation in order to get the listing, hoping the owner will lower his expectation if an offer comes in.

But here’s the deal, over-priced businesses usually don’t generate quality offers. For me, I take the honest approach and tell my clients in advance what they can reasonably expect to get for their business. Sometimes there is fallout like Marvin, but most times, an owner will recognize and appreciate my honesty.

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