Any good resources for educating Sellers?

searcher profile

November 15, 2024

by a searcher from The University of Michigan - Stephen M. Ross School of Business in Portland, OR, USA

Hello again ETA friends,

I finally got an asking price from the septic business that I have under LOI.
Yes, I sent an LOI before there was a price.
Their asking price is WAY up there! Like 5 times SDE, and their SDE is less than $500k.
This is a proprietary deal so no broker to guide the seller. Clearly they need some education on how to value there business.

What are some good resources that Sellers can use to understand what their business's value is?

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commentor profile
Reply by an intermediary
from The Johns Hopkins University in Gainesville, FL, USA
I've recorded and discuss the five key actions that you should take to be prepared for a sale regardless of the timing. These steps ensure that you will be able to optimize your exit, whatever that means for you. I've also broken down each step into its own short video and I have published these on my YouTube channel at redactedredacted The segments are: Creating value by choosing the right business structure Understanding and communicating how your business creates value Eliminating bad habits that decrease exit valuation Removing impediments to a sale Preparing for due diligence
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Reply by a searcher
from The University of Chicago in Chicago, IL, USA
My personal experience has been that it's hard to move sellers off "the number" they have in their minds, but that it's possible to share (1) why that number is way above market, and (2) you can give them that number, but a large percentage of it will need to be in the form of seller financing or even just paid over time without any interest, over a potentially long period of time. Essentially: "My price your terms, or you price my terms." And if they want more or most of it upfront, it has to be at a reasonable valuation that a bank or investors would be ok with based on the other deals they are seeing.
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