几年前我是 retained to sell a profitable business 在肯塔基州. The owner was ready to retire, but fully committed to helping the buyer make a smooth transition. The 50-year-old business had a positive reputation in the community, 忠诚的客户群, 位置也很好.
I located a prospective buyer through a referral from a banker. Once I showed this prospect my client’s business, he was soon engaged in a deep-dive evaluation. His banker told him they would fund 60% of the acquisition, meaning he would need 40% equity, 他有可用的. He was tired of the travel in his corporate job, but he made a nice salary so he had rather high expectations for what he’d need from a business acquisition. 这笔交易符合他的条件. The business had sufficient cash flow to fund the bank note, 支付他期望的薪水, and give him a reasonable return on his equity investment. 有什么不喜欢的，对吧?
问题是, the business was overpriced by about $500,000, and the prospective buyer and his advisers couldn’t escape the belief they were paying too much. 所以，这笔交易失败了. 他们想要一个“好交易”.”
As I reflect on what happened, I’ve learn there are at least three reasons when it might be okay to intentionally overpay for a business.
#1 The cash flow is strong and meets the buyer’s financial needs. It’s the essence of “penny wise, pound foolish” when a business meets all your expectations. Don’t fixate on whether the 卖方 is getting a windfall, 就去做吧, especially if you plan to own the business for a long time
#2 There is a sustainable record of cash flow stability. 就我个人而言, I would rather overpay for a business I know I can count on, as opposed to get a “good deal” on a business that has unstable cash flow.
#3 There is immediate low-hanging fruit opportunity to grow the business. I bought a business 22 years ago that had tremendous upside because it had an ineffective sales effort. By simply increasing the quality of sales machinery, I increased the revenue fivefold in one year. 是的, I overpaid for the business relative to its performance at the time I acquired it, but I was quickly able to make the business perform well beyond the level when I acquired it. I’m not saying you should value a business based on its potential (that can be dangerous), 但同时, don’t ignore potential when it comes to seeing a good deal.
So, back to the story of the prospective buyer of my Kentucky based client. I understand that prospective buyer is now looking at a “good deal” that will require a relocation. I hope it works out for him; he’s a great guy and should do well at whatever he decides. I just think in this situation he made a mistake trying to find that “good deal” which can come disguised as an over-priced business.
JIM CUMBEE is President of 田纳西河谷集团, Inc. a retainer-based business brokerage and transition mediation 公司位于田纳西州富兰克林. Cumbee is an attorney and has an MBA from Harvard Business School. He has a wide range of corporate 和企业家ial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The names and fact patterns above have been changed to preserve the parties’ identities.