Setting sales price at the right level

The correct price/value of a business is what someone will pay for it.  This is a massive over-simplification because, to a large extent, the price/value will be based on the buyer's perception of the company plus the buyer's own situation. Some buyers will be prepared to pay more and of course if there is buyer competition, this will usually increase the price paid.

The setting of the asking price is therefore more of an art than a science - there is no magical formula that can be applied to all situations – and generally there will be a range of prices for different types of purchaser (BIMBO, Trade Purchase, Venture Capital etc) and according to strategic fit.

CMR approaches the challenge by working with the owner to discuss the various issues involved.  A non-exhaustive list of items to consider is: past profit performance, consistency - rising or falling, marketable assets, speed of sale sought, any barriers/ skeletons-in-the-cupboard, market situation recent sale of similar companies, predatory acquirers, strategic fits, buyer motivations.

CMR's experts will suggest a price (or range of prices for different types of potential purchasers) having discussed the rationale with the owner.  However normally potential purchasers are asked to present a bid without a formal asking price being mentioned.  If there is no specific rush to sell the business, the decision will normally be taken to price the business for the ideal buyer - i.e. the buyer who will see the greatest value because of their own circumstances.  We also take negotiating margins into account - many buyers will only feel happy if they have negotiated a reduction in price!

As we start to market the business and have discussions with potential buyers, we will start to refine the target price - perhaps the price is a little too high or we find unexpected strategic fits with potential purchasers?  Note that it is normally much easier to go down than up, although both do happen!

At the end of the day decisions on pricing and the deals to make are yours, the vendors.  CMR will guide you, but it is of course your ultimate decision.

To discuss the sale of your company in absolute confidence - please contact CMR by phone (0207-636-1744) or email to cmr@cmruk.com or complete this online form.