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Wednesday, August 02, 2006

More tales from Biz Broker Wife...

One of my wife's standing peeves is sellers who can't realize that they're selling a business, not hitting up their buyer as an ATM to rebate all the money they spent on the business. A typical would-be seller:

"I paid $70K for this biz a year ago, which made $40K/year at the time. I spent $30K upgrading everything and putting in new floors. Last year, it made $20K as the biz had a falling off of business due to the ownership transition. Now I want to sell for $150K, which includes my $70K original price, my $30K of upgrades, your commission, something extra for my troubles, and a bit of headroom for negotiation."

Biz Broker Wife informs the guy that a buyer is only getting 13% ROI at that price and would probably just keep his money in the bank, and asks him: would he buy the biz at that price? He replies that selling the biz is her job...

Selling illiquid assets for third parties has got to be one of the hardest -- and most underappreciated -- jobs out there.
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