daily articles for founders

Let the acquirer name a price  

A good piece of advice from an unlikely source (the Globe and Mail) by John Warrillow:

One of the most basic rules of negotiation is to never be the first to name a starting price. If you do, you could leave money on the table, or turn off a prospect before you even start the dance.

Fortunately, there is a formal document you can request from would-be suitors that forces them to put their number – or at least a range – on the table first.

So, what to do if someone is trying to figure out how much you value your company?

There is no need to be the first to name a price. If you find yourself being asked for your number over a quiet lunch, don’t feel obligated to react.

Just let your suitor know you’d be happy to review an IOI or LOI. A serious professional buyer will know what you’re looking for, and will be happy to oblige.

More from the library:
How VC firms are managed
Surviving and thriving in a two-sided market
Four pricing principles
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