Here at TKO Miller, we like to call it a “Tap on the Shoulder” when a business owner receives an unsolicited call, letter, or email to purchase their business.
Too many owners find these friendly, out-of-the-blue contacts seem perfectly innocuous. To buyers, they are the perfect opportunity to isolate a potential seller. An isolated seller is generally in a weak position and stands to lose substantial value.Let’s explore why business owners, who, in many cases have spent years arguing with vendors about the price of virtually everything, will turn around and respond to a single buyer with an offer to purchase their business.
1. I am tired.
Entrepreneurs work very hard. They wear many hats. It has taken many years of blood, sweat, and tears to get to this point and many owners wake up one day and realize that they are exhausted. For some, it’s that the day-to-day of running a business that just isn’t fun anymore. For others, it can be something more serious, like a health concern that makes them want to do something else.
2. After many years, I finally have this business making a decent profit.
Running a business is difficult. Running a profitable business is really difficult. After years of maximizing lines of credit, sweating through personal guarantees, and watching every penny, the opportunity to let someone else shoulder that burden can be very attractive.
3. I want to spend more time in Florida.
Or Arizona, or Palm Springs, or Golfing, or Sailing… At this point in many entrepreneurs’ lives, they probably have a place or a hobby that may start to become more and more attractive. Many business owners think that the business will be fine if they spend a few months in Florida, only to find out that it really doesn’t run that well without their day-to-day oversight.
4. I have grandchildren!
Let’s face it, those grandchildren can pull on your emotions more than you ever thought possible. As a business owner, you may have spent many hours away from your own children and many don’t want to miss out on the opportunity to spend time with their grandchildren too.
Whatever the reason, sometimes a potential buyer can catch a business owner at a weak moment. They approach you with the idea of selling your business, and it just feels like the right time. We understand. However, we also know that you wouldn’t just get one bid for supplies. Why only work with one buyer? As an isolated seller, you lose all leverage. Even if you negotiate a great price, you have lost the ability to push on the buyer when things get tough – and things always get tough.
Do yourself, your family, and your business a favor and call an investment banker. We have the ability to examine your "Tap on the Shoulder" offer and compare it with market prices. Most importantly, we can talk to you about how a more thorough process can help you achieve and maintain leverage and extract and hold value. TKO Miller, LLC has a long history of working with family-and-founder-held businesses and knows the many unique challenges that face these types of business owners.