Selling an accommodation business can be challenging, especially when buyers and sellers have different price expectations. This is especially true in uncertain markets, where agreeing on a final sale price may seem impossible. Fortunately, there are strategies to help bridge this gap.
In this post, we’ll cover how to agree on a price for your accommodation business sale, focusing on creative approaches that make negotiations easier for both you and the buyer.
Why It’s Hard to Agree on a Price
Buyers and sellers often approach price from different perspectives. Sellers naturally want the best possible return for their hard work, while buyers need a price that justifies their investment risk. In uncertain markets, this gap widens as economic conditions add pressure to both parties.
Part 1: Effective Strategies for Reaching an Agreement
1. Design a Structured Handover Period
One effective approach is to build a structured handover period into the sale. This period allows the buyer to transition smoothly, reduces risk, and makes your asking price more appealing.
Options for a handover period include:
- On-site training: Offer training to help the buyer learn business operations.
- Client and supplier introductions: Familiarise the buyer with key contacts to strengthen business continuity.
- Ongoing support: Provide a post-sale support period where the buyer can contact you with questions.
A structured handover period makes the business feel more stable to the buyer and can increase their willingness to agree on a price.
2. Offer a Trial Period (if Practical)
In certain cases, allowing the buyer a trial period can help bridge price gaps. This pre-sale arrangement lets the buyer work in the business to verify income, operations, and overall profitability.
If your business is suitable for a trial period, it can give buyers greater confidence, reduce perceived risk, and encourage them to agree on a higher price.
3. Consider a Non-Compete Agreement
Buyers are often concerned about the seller opening a competing business nearby. To address this, include a non-compete agreement in the sale terms. By agreeing not to compete within a specified area and timeframe, you provide the buyer with reassurance, potentially making it easier to settle on a price.
Why These Strategies Work
By offering support, trial periods, or non-compete agreements, you reduce buyer risk and address their concerns. These terms make the buyer more comfortable with your asking price, as they see that you’re committed to their success. This approach not only helps bridge price gaps but also builds a foundation of trust, making negotiations smoother.
Stay Tuned for Part 2: Vendor Finance and Earn-Outs
If you’re struggling to agree on a price with potential buyers, these strategies are a good starting point. Stay tuned for Part 2, where we’ll explore more advanced options like vendor finance and earn-outs to further bridge the pricing gap.
For more guidance on selling your accommodation business, contact us today. We’re here to help you find the best solution for your sale.
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