A recent comment on an online forum I belong to had to do with a majority business owner wanting to buyout a minority owner whom was, and I paraphrase, “Not a team player” and needed to go. There was a difference of opinion between the two on the value of the shares.
My comment was, “Welcome to my world.” Most owners don’t understand that their small business won’t sell for the same multiple (of profit, EBITDA or cash flow) as a large corporation will sell for. Too many buyers hear someone say they should pay for the value of the assets not the “blue sky.”
The bottom line is that businesses sell within a set range based on a companies size, warts, potential, efficiencies and buyer fit. That set range is different for different size companies (larger firms sell for a higher multiple than smaller ones, all else being equal).
Education is one of the three key components to getting a deal done (along with motivation and relationship). Rarely is a business so special that it will sell for more than it should, based on history, norms and guidelines. Of course, every owner thinks his or her business is that special case just like every homeowner thinks his or her home is worth more than the one down the street.