Managing Expectations While On Market

Deciding to sell your business can be a nerve-wracking yet exciting endeavor. It marks the culmination of many years of dedication, hard work, and strategic planning. As you prepare to go to market, engage with buyers through site visits, field and respond through information requests from interested parties, and hopefully navigate potential negotiations with buyers, it is vital not to overlook the significance of the market feedback you may receive while fielding these various levels of interest. The input received throughout the stages of this process is paramount to consider when managing your expectations while you are on the market. Understanding and finding the overall market consensus of feedback can help you determine what may add value to your overall offer or detract from your valuation. An often overlooked aspect is considering the market feedback generated by interest and adjusting your expectations accordingly.

When you open the door to third parties to consider acquiring your opportunity, you also invite their opinions - both positive and negative. It's crucial to recognize that some feedback may highlight operational strengths and weaknesses that could affect the valuation of your offer. As the seller, it is essential to consider the overall market feedback and analyze whether there is a consensus in market feedback on what is valuing or devaluing your business in the presented offers or interest.  As the seller, it is important to be realistic about the value of your business. On the contrary, it is even more crucial to take into account the feedback and assess whether some of the feedback is worthwhile addressing in present-day operations. By addressing negative feedback, you can feel empowered and proactive in enhancing the value of your business. 

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While you continue to operate your organization, it's easy to remain emotionally attached and overvalue your enterprise. As the seller, it is critical not to let your judgment get clouded by emotions, and it is paramount that you remain objective and realistic about your business's worth. Emotions often make this one of the most challenging aspects of going to market because you run the risk of overvaluing your business. In doing so, you risk ceasing all market interest, which may complicate negotiations. While managing your expectations, it is essential to consider how the market views your opportunity. Focusing on understanding how the market is assessing value, basing multiples in transactions, and evaluating the goodwill of your business will allow you to maintain a certain degree of level-headedness that will help you manage your expectations for valuation but, most importantly, make negotiations smoother for all parties involved in conversations. By understanding the market's perception, you can feel strategic and insightful in your selling approach.  

As you start to receive feedback, you should be able to see where you can position yourself as the seller. If the overall feedback is leaning more negative than positive, it is essential to consider how it can be addressed internally. Sometimes, this means removing yourself from the market for some time to firm up internal procedures, management, customer concentration, or other issues the market has brought to light. Applying negative feedback to current operations can show the market that you are committed to making the opportunity more attractive. On a similar note, emphasizing the competitive advantages you've identified in the market can positively influence perceptions. Beyond just financials and the constantly changing market dynamics, selling your business is a journey filled with unexpected twists and turns. By embracing market feedback, understanding your business's true value, and realistically managing expectations, you set the stage for productive conversations to help you reach your goals.

Selling a business involves more than just financial considerations and navigating market fluctuations. Recognizing and avoiding emotional biases while considering the perceived market feedback and applying it where possible allows for smoother negotiations. Whether positive or negative, embracing the overall consensus will enable the seller to gain valuable insight that may help stomach the overall enterprise value from the market. Market feedback can provide valuable insights that help sellers determine whether to continue selling, take a break to focus on their business, or build relationships with potential buyers. This understanding facilitates smoother negotiations with the right buyer, fostering a successful transaction for all parties involved. Ultimately, it is the seller's choice to recognize the different opinions received from the market regarding their business. However, failing to align themselves with the market feedback can lead to strenuous, contentious conversations that may cause market fatigue and lead to a longer sales process.

Author

Jeffrey Garza, Deal Associate, Benchmark International

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ABOUT BENCHMARK INTERNATIONAL:

Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $11 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International's transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook's Global League Tables.

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