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Asking Price Considerations


Jeff Snell | 03/19/2024

Businesses for sale often present a diverse range of circumstances, making it challenging to establish an appropriate listing price. Additionally, the intentions of potential buyers significantly influence perceived value, with distinctions arising between owner-operators and those intending to hire management teams. This white paper delves into the complexities surrounding businesses for sale, exploring the interplay between stating a listing price, buyer types, business size and unique business attributes. By understanding these dynamics, sellers can navigate the market more effectively, while buyers can make informed decisions aligning with their objectives.

The process of selling a business involves multifaceted considerations, with listing price being a critical factor. However, many businesses for sale do not include a specific listing or asking price, creating ambiguity in the market. This ambiguity stems from various factors, including the intentions of potential buyers, the size of the business, the industry, and the unique business features of the business being sold.

Understanding why some businesses omit listing prices and how different buyer types and business sizes influence pricing is essential for both sellers and buyers.

Factors Influencing Listing Prices:

  1. Market Conditions: Fluctuations in the market, industry trends, and economic conditions can significantly impact listing prices. In dynamic markets, sellers may opt to omit listing prices to allow for flexibility in negotiating deals based on prevailing conditions.
  2. Financial Performance: The financial health and performance of a business play a crucial role in determining its listing price. Businesses with consistent revenue streams, profitability, high barriers to entry and growth potential command higher prices as do businesses with recurring revenue and long-term client contracts. Conversely, businesses facing financial challenges or uncertainty may hesitate to disclose listing prices to attract potential buyers without immediately revealing financial weaknesses.
  3. Intangible Assets: Besides tangible assets, intangible assets such as brand reputation, customer relationships, and intellectual property can influence listing prices. Businesses with strong intangible assets may justify higher valuations, while those lacking in this area may refrain from disclosing prices to avoid undervaluation.
  4. Seller's Motivation: The urgency or motivation of the seller can influence whether a listing price is disclosed upfront. Highly motivated sellers may choose to provide a clear listing price to expedite the sale process, while others may prefer to test the market or engage in negotiations to maximize returns.

Types of Buyers and Their Impact on Pricing:

  1. Owner-Operators: Owner-operators are individuals who intend to actively manage and operate the business themselves. For these buyers, the perceived value of the business often encompasses personal involvement, lifestyle considerations, and entrepreneurial aspirations. Owner-operators may be willing to pay a premium for businesses aligned with their interests, expertise, and time commitment especially if they see significant growth potential or synergy with their existing operations.
  2. Investor Groups or Management Teams: Conversely, investor groups or individuals intending to hire management teams may place more emphasis on scalability, operational efficiency, and ROI. These buyers may have different valuation metrics, focusing more on financial performance, market positioning, and potential for expansion. Businesses targeting this buyer segment may choose not to disclose listing prices initially, allowing for in-depth due diligence and negotiation based on projected returns and strategic fit.

Impact of Business Size on Pricing:

  1. Small to Medium-sized Enterprises (SMEs): SMEs often operate in niche markets or specific industries, where valuation methodologies may vary based on sector-specific factors and local economic conditions. Listing prices for SMEs, typically valued using a multiple of seller discretionary earnings (SDE) method, may vary widely, with some sellers opting for a price range to attract a broader pool of buyers, while others may withhold pricing information to encourage inquiries and facilitate personalized negotiations.
  2. Large Corporations: Larger businesses typically undergo more comprehensive valuation processes, typically valued using a multiple of adjusted EBITDA earnings, considering a broader range of factors such as market share, industry dominance, and competitive advantages. Adjusted EBITDA multiples are higher (4x-6X) than SDE multiples (2x-3x), but do not consider executive compensation and benefits as an add-back.

Determining Price Thresholds:

  1. Businesses Marketed with Asking Prices: Businesses with asking prices often fall within a defined range based on financial performance, industry benchmarks, and seller expectations. Price thresholds for these businesses are typically set to attract qualified buyers while maximizing the seller's return on investment. These asking prices are subject to negotiation based on due diligence findings and buyer-seller negotiations.
  2. Businesses Marketed without Asking Prices: Businesses marketed without asking prices may cater to a broader spectrum and more sophisticated set of buyers, allowing for customized pricing based on individual preferences, strategic alignments, and market dynamics. Price thresholds for these businesses may be determined through confidential negotiations, competitive bidding processes, or professional valuation assessments, ensuring optimal outcomes for both parties involved.

Impact of Transaction Complexity:

Businesses with unique attributes are often not marketed with an asking price to provide flexibility to buyers in structuring their offers. Businesses that have excess inventory or raw materials, have experienced materially higher or lower performance during the review period, have recently incurred CAPX or other large expenses not in the normal course, or similar anomalies may be candidates to market without an asking price.

Conclusion: The decision to include or omit listing prices for businesses for sale hinges on various factors, including industry, geography, market conditions, seller motivation, buyer types, and business size. By understanding these dynamics, sellers can adopt pricing strategies that attract the right buyers and maximize value, while buyers can navigate the market more effectively and make informed investment decisions. Moving forward, fostering transparency, flexibility, and strategic alignment will be paramount in facilitating successful transactions and driving sustainable growth in the business-for-sale market.


  • Pratt, Shannon P., et al. "Valuing a Business: The Analysis and Appraisal of Closely Held Companies." McGraw-Hill Education, 2017.
  • Damodaran, Aswath. "The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit." John Wiley & Sons, 2011.
  • Holmstrom, Bengt, and Jean Tirole. "The Theory of the Firm." Princeton University Press, 1991.

This blog was originally written by Jeff Snell, LMCBI, M&AMI, CM&AP, ABI. Jeff is the founder and principal broker of ENLIGN Business Brokers and Advisors (www.enlign.com), headquartered in Raleigh, NC. For over 20 years, ENLIGN has been providing business brokerage and M&A transaction services to main street and lower middle market business owners across the United States via the Atlas Alliance. He can be contacted at (919) 624-1124 or jsnell@enlign.com.