The owner of a business has a reality of value based on his real experience of the benefits which flow to him on a consistent basis. He knows 100% that “the business” makes money for him. He knows that it is more valuable to hold on to it, than to sell it below that value reality.
If a perceived premium offer is made – one which tips the scales of value from worthwhile holding, to worthwhile disposal; the run of play changes. In other words, if the offer received “makes sense” in that the owner will be happier as a former owner than as the current owner, then he will sell.
A buyer of a business can only act on imagined reality. Sure, that imagined reality is based upon thorough investigation; but until it is actually lived, the reality can only be imagined. That imagination is unique to the human race, and I suggest is bound up in the fear and greed dichotomy which grips us all, in all the decisions which we make.
For a business owner to dispose of his business, it is incumbent on him to translate his reality of value into perception of value – imagined reality – in someone else’s hands. Again, in other words; he needs to convince the purchaser of the value. Essentially, he needs to sell the darn thing, just as he would sell anything else.
That is what we strive to achieve with our clients – in helping them through the “PrepareYourBusinessForSale™” program to make them “Prepaired” with their eventual new masters. “Prepaired” is not a spelling mistake. It is what shareholders do in advance of selling their equity: They identify the market, and they make what they’re selling, attractive to that market. They pair their offering with the anticipated requirements of the future owners. They get “prepaired” through PrepareYourBusinessForSale™.
Where realised value meets imagined reality – made incarnate through the transfer of retirement funds. That’s a good thing!