Can emotional attachment distort what my business is worth?

If you built the business, a number that feels fair to you may differ from the one a buyer will accept. The useful question is what actually sets the price. BDC states that a business’s price is fundamentally determined by its perceived value to a potential buyer, which it describes as often a blend of financial performance, future potential for growth and strategic fit. The years you have put in, and what the business means to you, are not on that list.

What BDC says buyers weigh

BDC’s guidance on negotiating a sale adds that lower perceived risk typically equates to higher value. It also asks how easily the business can operate without the current owner, and says strong management teams, documented processes and clear systems increase value. BDC’s guide to buying a business lists reliance on the current owner among the factors in the final purchase price. These points describe the business apart from you, which is a different yardstick from your history with it.

Where attachment can show up in a number

Attachment is not a valuation input, but it can shape the choices around one. Check whether your asking price rests on what you put in rather than on what the business earns. Ask whether you are counting your own long hours as something a buyer receives for free. Notice whether you have a reason you cannot explain for rejecting a lower figure. These are questions to put to yourself before a buyer puts them to you.

Testing the number against someone outside

BDC says it is important to engage a Chartered Business Valuator (CBV) to get a realistic market-perceived price. It describes such professionals as giving an independent assessment using methods such as discounted cash flow, asset-based valuation and market multiples. Buyers test the number too: BDC says due diligence lets a buyer confirm that the initial valuation and letter of intent still make sense. An outside figure gives you something to compare with your own before that happens.