Sellers are as unique and distinctive as a fingerprint. Stating this truth is intended to acknowledge how generalized the following assertions and assumptions are. The Exit Strategies team has seen some useful generalities emerge when it comes to seller perspectives and viewpoints.
Below are a few common seller perspectives/viewpoints that if accurately identified create an enormously powerful point of reference for buyers. This is far from a comprehensive list. I’ve attempted to focus on viewpoints that we often encounter. I’ve also included some questions that these sellers should be asked, either by themselves or others.
The Absolutist Seller
The owners that tend to be tortured most by the question of when to sell are what I call the “absolutists”. These owners labor under the notion that there is a perfect moment to sell and an absolute price to get for their business. They feel there is a perfect moment and perfect terms and they need to find it as if unraveling a complex equation or cracking a code. If the optimization point to sell a business does exist, then I can tell you with confidence that most businesses are not sold at that moment. Life and business are rarely that precise and orderly.
Some Questions the Absolutist Seller Should Ask Themselves
- Does selling at the perfect time guarantee a successful transaction?
- Do I really have to sell my business at the perfect time to be successful at doing so?
- When it comes to selling my business, are my expectations realistic?
- If I do not sell at the right point will my financial goals still be realized?
- Am I like a pitcher who believes that winning the game is not enough; it needs to be a no hitter? If this is true of me, is this a formula that will lead to killing a good and profitable deal? In short, is this a formula for misery?
The Pros & Cons Seller
These are the Benjamin Franklin owners who like Franklin make lists of pros and cons when facing a big decision like selling their business. They slice and dice the pros and cons like a chef with a knife. If this seller actually wrote his pros and cons list down, you could probably discern their bias for selling or not selling just by how they constructed their list.
It’s good for a buyer to know just how solidified the pros and cons list is when they first engage the seller. I usually like to know the last time the list was altered and edited and how. Needless to say if their list is in flux and has not solidified, these are unstable sellers.
Some Questions the Pros & Cons Seller Should Ask Themselves
- Is my list comprehensive, even noting relatively small considerations?
- Is my list subconsciously biased to the sentiment of selling or not selling?
- Have I weighted each of the pros and cons for their ultimate significance? After all when it comes to pros and cons they’re not all created equal.
- Have I asked other big stakeholders to make their own lists?
- What would this list have looked like two years ago?
End of the Road Sellers
Another group of sellers are what I like to call end of the road sellers. For many reasons these sellers simply reach the end of the road with their business. This state of mind can be reached despite great profit and potential. End of the road sellers are not in search of the perfect moment or more pros than cons; they’re simply looking for a buyer and terms they can live with.
Some Questions the End of the Road Seller Should Ask Themselves
- Are the conditions and circumstances that make me feel I’ve reached the end of the road permanent or could they change?
- Can I significantly disengage from the business without selling it? If yes, would that appeal to me?
- If I didn’t sell, what would happen to me and the business?
- If I sell for a discount to market will I satisfy my entrepreneurial and financial goals?
The Kismet Seller
Some sellers view a specific time to sell or a specific buyer as a direct statement from the universe. Understandably I find these types of folks have more blind spots in their selling rationale than most sellers. These buyers can quickly be as all out as they were all in.
Some Questions the Kismet Seller Should Ask Themselves
- Have I ever had this feeling of fate or destiny with a decision before? If I have, what was the outcome?
- Why specifically to I believe this deal was meant to be?
- Is this really fate or a very strange set of favorable coincidences?
Understanding a sellers approach to the decision to sell can be useful. Like all big decisions, the decision to sell is often complicated and impacted by many factors. Knowing why and how someone decided to sell can sometimes influence the buyers’ decision to buy or walk away. It is very difficult to find and determine the perfect time, price, and fit. That is why it is helpful to identify the most important aspects of a deal to you prior to considering selling. Whether it is purchase price, partnership, timing or other external factors these dynamics should be weighted proportionately to aid in determining motivations.