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Would more owners sell if they know what their businesses were worth?

I had a closing yesterday for a IT services company in Dallas that sold for $918K when the seller wanted just $340K. (I am aggressively pursuing related businesses for strong buyers.)

Douglas Batts

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Answers (5)
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The BAF Group LLC
MD

As I said: Something did not sound right!

Feb 5, 2010
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

I wasn't trying to debate the value of the business but clearly, the owners had settled on a minimum net price since the husband was having health problems. And this business has SDE of more than $400K so was it definitely worth more than the owners thought, which is what prompted my question.

Feb 5, 2010
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The BAF Group LLC
MD

I agree with both previous writers. Something does not sound right. I have had strategic buyers pay more than what a business is worth, for those strategic reasons. But that is absurd!

Feb 4, 2010
Robert Cutler
Attorney
New York County, NY

Douglas, did the seller come up with $340K as an asking price or was this the appraised value of the business? If the latter, I would like to know who did the appraisal so I can tell my clients not to use that appraiser. But If the seller came up with the price, then clearly the seller was too conservative in his or her valuation and should have consulted with a valuation expert.

Feb 4, 2010
No User Photo

In my industry it is the opposite. Owners are in extreme denial about what their restaurant/bar is worth. On Monday I looked at a place that the owner wanted 450k for his restaurant/bar. It has been closed for 6 months...... because of a shooting. The place is worth ffe and that is it. Used ffe are worth pennies on the dollar.

Feb 4, 2010

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