A business on the market. Relationship Between Asking Price And Businesses That Remain Unsold
A business on the market.

Question:

Is there a co-relationship between a business' asking price and how long it remains unsold?

Answer:

One would think that the seller would lower the price of a business that has been has been on the market for a while. Quite often this is the case, especially

when a good business broker or other intermediary is involved. They will constantly measure the market and advise the seller that price reductions may be necessary to increase activity. As long as the seller is truly motivated to sell, price reductions will occur because ultimately the market NOT the seller determines the price

. However, if the seller isn't motivated, it doesn't matter whether they are selling themselves or through a broker, they will maintain their inflated price and probably never sell the business.

This should not be confused with a business where the seller may be holding out for the right buyer. Also in specialty businesses where the buyer pool is not large the time to sale can be much longer.

You should also consider why a particular business hasn't sold. Surely price can be an issue. But a good business, with a solid history, clean books/records, and good future prospects will move very fast in today's market.

Of course there are always exceptions, but if a business has been on the market for many months with no activity, the best comparison is to fresh fish: the longer it hangs around, the smellier it gets.



This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here

Recent Posts
The Biggest Mistake Buyers Make When Valuing A Business

When you reach the point of having to value a business for sale, buyers often handcuff themselves and do not even realize they are doing it. Although putting a price tag on a busin

Continue Reading >
Dealing With An Overpriced Business For Sale

When I first entered the business brokerage world a number of years ago, a colleague at the firm told me that “every business is overpriced the day it is listed for sale”. Ofte

Continue Reading >
The Issue Of Depreciation When Valuing A Business

There is usually a very healthy debate between buyers and sellers regarding each side’s calculation of the total Owner Benefits (OB) figure. First, let’s clarify what exactly i

Continue Reading >
Site By Consult PR
© Diomo Corporation. All rights reserved