Pricing A Business Too High
It is human nature for business owners who are putting their companies up for sale would want to go to market with a higher price than what the valuation suggested, hoping buyers will still look at the opportunity.
Unfortunately, though, the right buyers are savvy, knowledgeable, and serious about their acquisition targets. These buyers know the marketplace and won’t even look at a company if they think the price is out of line with economic realities.
Should a business ever be listed at a higher price? Yes, but rarely. The asking price must be based on reality…a reality that buyers and their lenders can believe in. The buyer will look at return on investment and their lenders will require that the deal makes sense in terms of debt repayment. It is that simple.
If the price is too high, there may be very few looks and no offers. Not a strategy to count on.