Thoughts on how to handle initial conversations with no listed ask price?

by a searcher from Northwestern University - Kellogg School of Management

9 months ago

I would think owners have a number in their head if operating with a broker, but what strategies can be used in creating a good initial negotiating foundation? Maybe they are shopping for the highest offer with no immediate desire to sell? 

In the instance where an owner is not working with a broker, I can believe an owner might not have been giving too much thought to a price but surely there must a range, however impractical. 

I have a target, very near my industry so I have a sense of a multiple range but obviously do not want to just start winging out numbers, no matter how fact based.

Thoughts?

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lender from St.Cyril and Methodius University

I strongly recommend conducting a QoE. I’ve seen instances where it has helped buyers renegotiate a deal or even decide to walk away. The cost of a QoE can be amortized over the life of the acquisition loan, making it a worthwhile investment. If you don’t want to spend the money on QoE, at the very least, ensure you conduct a proof of cash.

1 month ago | like reply | 0 likes

searcher from The University of Chicago - Booth School of Business

If it's through a broker, I'd just ask the broker separately what range the seller is looking for. I usually get a directional answer from this, and would probe to understand what the rationale for the desired range is. Then one can narrow down further when introduced to the seller. Always helps to go into the seller convo with an inquisitive mindset and ask the right questions to better understand the business. It's also important to do enough research on the type of business, and demonstrate credibility as a skilled operator.

2 months ago | like reply | 0 likes

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