A while back I watched a buyer walk away from a business he had spent weeks looking at.
Good numbers, pretty profitable and the business was something he had seeking for a while.
And yet he walked.
Why?
“Because this isn’t a company, it’s a project”
And he didn’t have the time nor patience for buying a project.
That one line explains more about why businesses sell for less than almost anything else I could tell you.
When he looked under the bonnet, he saw too many things reliant upon or in the owner’s head. Key relationships, pricing, why things were done a certain way, etc.
None of it written down.
Nothing moving unless the owner was directing it, saw it, and/or gave approval to do it.
The buyer wanted something he could step in and run.
He wasn’t interested in a business project where he’d spend months untangling another man’s business before he could even begin.
Buyers treat these type of projects one of two ways.
They knock the price down hard to pay themselves for the work ahead, or they walk and find an easier less painful project to do.
Now the owner had no idea and when he found out, it was already too late.
The cat was out of the bag.
Word had got out that he was selling. The business went from running smoothly to something he was firefighting every day. Staff began drifting away, customers pulled back, and there he was patching fresh leaks and holding the whole thing together by hand.
He had thought he was sitting on a valuable company, because right up until he started the process, it ran beautifully.
Of course it did.
He was the one holding every piece of it together. What he could not see was that the day he stepped out, the value would walk out with him. And the moment word got out, it started coming apart on its own.
This is the gap that catches good owners off guard. The business feels rock solid from the inside, because you are the reason it works. From the outside, to the one person whose opinion actually sets the price, it can look like a job with your name stamped on every part of it.
The good news is you do not have to wait for a buyer to tell you which one you are holding when it’s already too late.
You can see it yourself, long before you ever sit across the table from one.
That is what the Buyer’s Verdict is for.
You answer twenty questions, you get a quick score on the four things buyers actually pay for, and you get a straight answer on whether you own a company or a project.
It takes a few minutes and it is free.
Business advisor George Sotiropoulos tells the story of a buyer who walked away from a profitable business because it was too dependent on its owner. The relationships, pricing, and decisions all lived in the owner’s head, and nothing was written down, so the buyer saw a project to untangle rather than a company to run. Buyers respond to that in one of two ways, a hard discount or walking away. The lesson is that a business which only works because the owner holds it together looks like a job to a buyer, not an asset, and owners can find out where they stand before they ever go to sell.