An astute buyer is going to structure the initial offer to insure that they get the best possible price and terms from you. Therefore, you should expect to receive a “low” initial offer. Don’t be offended – this is just an initial offer to “test the waters”. If you are asking $400,000 for your business, a prudent buyer may offer $330,000 as the initial offer. The buyer does not expect you to take the initial offer, nor should you expect the buyer to accept your initial counter offer.
Since the market is strong now and businesses are showing 3 years of growth, we are finding many multiple offers. When this occurs the offers are typically higher because the buyers are competing to get your company and will tend not to come in as low since they know there are other offers. All offers that you receive will have some contingencies.
Generally, these contingencies concern review of the financial information, obtaining a satisfactory lease and agreement on a training and transition period. Another contingency is to obtain funding. Other contingencies specific to your business may be included. Contingencies are normal and provide the buyer with the ability to “check out” the business before closing.