The Role Of Emotion In A Business Sale

20/04/2009 by info.

In the last week I had a client selling their business tell me that they wanted to increase the asking price of their business as a result of investment they had made in the business.

In the same week an interested buyer rejected the business at the old asking price after a viewing because they were not happy that the business had been built on solid foundations.

If the business was really worth more as a result of this investment surely it was a bargain and the buyer should have jumped at the chance of buying it?

You could argue that the seller was not able to convey how strong their business was but I personally think that what happened was that the seller and buyer had different perceptions of the value of the business. Often the seller aware of what effort they have made in building up the business think that the business is worth more. For the buyer this is irrelevant.

The seller has an emotional attachment to that business, in the same way that they have an emotional attachment to a photograph of their own family.

Where you would pay for a photograph of your family, I would not give you a penny for that same photograph. In the same way I as a buyer am not willing to give you extra money for the emotional investment you have made in your business.

However the person who decides how much a business is worth is the buyer. 99% of the time that seller has to detach himself from the emotional effort they placed in their business so that their perception of value matches that of the buyer and are able to recognise themselves the true market value of that business.

If they cannot do that they will not be able to sell their business.

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