Is the Highest Offer the Best Offer?

At O’Keeffe & O’Malley, we always work to get the best possible deal for our clients when they sell their businesses. Sometimes, that’s the highest offer, but not always.

It’s critical for us to understand what’s important to our seller clients, so we are prepared to negotiate the best possible scenario for each individual. We ask a lot of questions and consider many factors, including:

• Deal Structure – We discuss priorities, such as whether it’s more important to have maximum cash up-front, or whether we should work toward a higher price, incorporating a seller note, earn-out or other creative option. We discuss the seller’s stance on risk/reward.
• Offer Structure – When we receive more than one offer on a business, we’re very rarely comparing apples to apples. A thorough look at what each potential buyer is purchasing must be evaluated to determine what is actually best for our client.
• Financial Risk – Sellers will need to assess their own risk tolerance when faced with a choice between a higher price from a buyer with questionable resources and a lower price from a buyer with strong financial resources.
• Continued Involvement – Not many buyers want the seller to walk out the door the day the deal closes. The longer the seller is willing to stay on board and help with a transition allows us to attract the right kind of buyer and adds value to the transaction.
• Employees – For some sellers, the most important thing is assurance that their employees will be not only retained, but well taken care of. If this is a priority, we like to know that early on so we can make that clear to buyers.
• Location – Some buyers may insist upon moving the location of the business after closing, which could be either a positive or a negative for the seller, and must be considered.
• Name/Legacy – In some cases, the name of the company is important to the future success of the company, or simply important for a seller’s legacy.
• Culture – Many business owners have worked long and hard to develop a company culture that drives the business and motivates the employees, and will look for assurances that the culture will be maintained after a sale.
• Chemistry – Sometimes a lower offer will be accepted simply because of a gut feel. The chemistry between a buyer and seller cannot be underestimated. If the two parties have similar values and feel a connection, a deal is more likely to proceed smoothly.

Every deal is different, and other factors will arise that must be evaluated. We help our clients look objectively at the pros and cons of each situation and offer advice based on our years of experience and what we know about our client’s individual circumstances and preferences. The strong relationships and trust we build with our clients motivate us to work toward the best possible deal, every time.

For a confidential discussion about your priorities, email mike@ok-om.com or call 913.648.0815.