How Much Is This Company Worth??

[a_caldwell]

I just spoke to the local Small Business Dev. counselor. B/c I have limited funds he advise me to talk with the company/owner first and then hire a lawyer and accountant if the situation progresses.

I plan to continue the research and do some additional discovery work and start a dialogue within a few weeks.

I will appreciate any tips on the above approach.

[Baseline]

Your personality should determine your approach. You could take the owner out to lunch to broach the subject- or schedule a high-powered meeting with powerPoints, pie charts and reams of data.

The other factor is the current owners style/personality. If he/she is button down, go formal; if casual, go lunch and ask feelers.

Do some research- business is a lot more about personality than most people realize or admit.

[vangogh]

When you approach the owner try not to be too over eager. Assuming the owner is willing to sell then you're in negotiations and you don't want to come across as wanting to buy too much. The more the owner knows you want to buy the more the price will go up. Try to keep the first conversation casual. In fact if you can think of another reason to call and then slip in the question about buying into the conversation that might be best.

You don't want to tip your hand too soon.

Once you've started talking and know the owner is willing to sell you want to determine how much you're willing to spend and go from there.

[a_caldwell]

//Will start dialogue soon..

Questions.

Should I start directly with the owner or with my previous contact. I had two previous brief conversations with a guy there in a supervisory role. He's been my only contact with the company. He gave me information on buying the remaining crates from the grocer.

When should I bring in the lawyer and accountant? Immediately after I learn the business is for sale or wait until I work out a price?

[Business Attorney]

I would suggest that you discuss the price, deal structure and negotiating strategy with your lawyer and accountant at the earliest possible date. You are going to pay for their advice sooner or later, so why not get it when you have the most opportunity to use it?

For example, if the accountant or lawyer see something that should decrease the price, and you have already reached a tentative price, you look like you are reneging. If you had that same information before you discuss the price, that would have been leverage to use in negotiating.

[vangogh]

David makes a good point. Your lawyer and/or accountant will be able to help you out a lot right from the start so why not take advantage of their advice before you begin any negotiating. They're there for more than the paperwork.

[a_caldwell]

I understand bringing in the lawyer for pre-negotiation help.

However, in my case is there really a need for an accountant early on?

- the company is literally defunct/failed
- there are no current sales figures to examine
- I really don't care about past sales figures, b/c I've sold the product myself and believe I have an angle that the company has overlooked or has no interest in
- this isn't a typical buy where the buyers needs convincing, I've been selling this item near exclusivity for the past few months and I'm already convinced. Its not the case where I need to verify the sellers past sales to ensure I can do the same, I'm basically taking a failed product and applying my own sales and advertising methods which I know is effective.

[vangogh]

I just meant it as an either/or/both in getting some advice on the negotiations by someone you're probably going to hire at some point anyway.

[a_caldwell]

It looks like its all a poker game from here on, or at least that is what I'm reading from it.

I spoke with the owner's wife who does daily operations within other brands of the small company. We had a general chat about the history of the company. After going over our conversation and doing a little research on the statements she made, I can tell she's been ordered to feign her husband's interest in reviving the company. She made too many contradictions.

I'll be out of town for a while, so I'll be talking to the owner in a few weeks, however, I'm sure the company is for sale.

[vangogh]

Good luck. Again try not to be over eager. The more you show how much you want to buy the company, the more they'll raise the price.