Deals with no asking price?!

by a searcher from The University of Chicago - Booth School of Business

1 month ago

hi all,

Second deal this week, when there is no asking price on the business, and also no detailed financials (they have a SDE calculation in the CIM, but can't rely only on that). They ask for LOIs with evaluation. 

Is this common? Are they doing this for price discovery, hoping there will be a bidding war?

Thoughts?

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searcher from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM)

This could be a big plus if you're wanting to use this as a strategy. You can set a negotiation baseline, potentially securing a favorable deal, however do your homework and thoroughly research the sector and company before you make an offer, you don't want to low-ball or offer to much and later on have buyer's remorse.

1 month ago | like reply | 0 likes

searcher from Princeton University

Lots of good comments above. When no asking price, you just need to determine what you'd be willing to pay for the business without the "asking price" serving as the anchor. If the seller/broker are only providing SDE, they are unlikely to get any serious indication of what the business is worth, since SDE is a pretty worthless metric on its own. If they won't provide more financial information before you provide an offer, probably not worth your time to dig in further unless it is a really attractive industry/niche you are targeting

1 month ago | like reply | 0 likes

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