In addition, factors such as relative bargaining positions and skills of either party will influence the final price.

Some gaps may be bridged by explanations and reckoning. Benefits to Owner, which is a key element for both approaches, is a good example for differences reduction through logic and rationale. Another example is a well-prepared and supportive due diligence package that may help reduce emotional arguments and uncertainties. Supporting material acts as a great "confidence builder" between the parties. Supportive information and techniques may include:
" A comprehensive informational memorandum that portrays all aspects of the business including history, industry's current state and outlook, operations, management, marketing, customer base, and financial projections
" Tax returns that reflect the true activity of the business
" Pre-qualify the business for financing
" Seller agreement to hold a note
" Attract many buyers to create a sense of competition for the business

Pre-qualifying a business in effect establishes an independent, third party valuation for the business. The loan to value ratio used by the financial institution determines a value by default, which may support the value perceived by the seller. The seller's agreement to hold a note provides a sort of "warranty" and also indicates a level of confidence in the business's strength, while reducing the buyer's required equity investment.

In summary, understanding the fundamental factors that influence a seller's determination of value and a buyer's market determination of price will help bridge the gaps between the two. Information is a key element in a typical deal as it provides a countermeasure to market forces and relative bargaining positions. Partial, incomplete or lack of information tend to shift attitudes from rational to emotional, thereby adversely influencing the buyer's perception of intrinsic value and weakens the seller's bargaining position.
Reprinted from Bizquest.com

For more information:
The Business Opportunities Group (BOG) is headquartered in Palm Springs, California and is an emerging leader in business opportunities, hotels, commercial and residential sales. BOG is a marketing innovator, catering to local, regional and national markets, benefiting its' customers bottom line sales. BOG is a premiere emerging business, hotel, commercial and residential broker in Palm Springs and Southern California.

Visit BOG at http://www.businessopportunitiesgroup.com

Contact Info:
Name: Dick DeCarlo
Address: 901 E Tahquitz Canyon Way Ste A101
City: Palm Springs
State: California
Country: United States
Zip: 92262
Web Address: http://www.businessopportunitiesgroup.com
Phone: 1-760-322-2286
For more information please visit: http://www.businessopportunitiesgroup.com