Your asking price is one of the most important factors to take into account when marketing your business for sale. Let's examine how business brokers and M&A advisers work with their business owners to support that pricing with specifics of why it is appropriate once you have determined a fair price.

Creating a Narrative Providing background on your company is important when defending your asking price. In order to correctly communicate the story to potential purchasers, your brokerage professional will assist you as you go through the process. Of course, prospective buyers will want to know the background of the company so they can comprehend its history and the reasons for selling. You should be confident in your ability to speak with potential purchasers and to explain the specifics of the item's value. The story is what creates value in the mind of the buyer. You can expect written documentation regarding your company from your business broker or M&A advisor. These aid customers in understanding your company's narrative and sales pitch. There should be several versions with varying levels of confidential information redacted or included. There should be a public version that does not include any factors that would identify the companies identity as well as a confidential information memorandum (CIM) that provides virtually all pieces of confidential information. Knowing Your Buyer's Point of View

It goes without saying that a significant factor in determining your asking price is that you want to choose a number that sounds both realistic and alluring to potential purchasers. We advise attempting to see the whole transaction from the buyer's point of view. To ensure a successful transaction, the buyer must be able to see how they will successfully own and run the company. It's not enough that you as the seller were able to do so because they will have debt service that you did not. Another thing to think about is how they plan to finance the venture. In many situations, providing help in the form of seller finance can greatly enhance a deal. The process can move more quickly if you use seller financing because you won't have to wait as long for a bank loan, which can take months. However, the SBA has not required seller financing as a part of SBA guaranteed commercial 7(a) business acquisition loans and brokers and sellers have minimized it's use ever since. "Being the bank" is not what most sellers want. Asking Price Challenges

Setting your asking price and then supporting it is not always an easy situation. It is crucial to feel informed and engaged because the process is a symphony of moving pieces. The process's starting point, ultimately justifying the asking price, is also simply the start of the trip leading to the conclusion of a successful deal. Remember that a letter of intent (LOI) becomes the backbone of the binding definitive purchase and sale agreement.  As such, you should not fall into the trap of thinking you don't need a transaction attorney to draft it. The LOI comprises all of the main moving parts of the agreement between buyer and seller - not just purchase price. Copyright: ENLIGN Business Brokers, Inc. Natee Meepian/BigStock.com