Entrepreneurs ‘should negotiate lower prices’ when buying a business

Posted 24/10/2010

Anyone buying a business should try to negotiate the price downwards in order to ensure they will gain a profitable investment.

This is the advice of Susan Schreter, a university lecturer in entrepreneurship, who told MSN Business that nobody should pay more for a company than it is worth in real terms.

“First-time buyers want to own a business so much that they skip the tyre-kicking process (called ‘due diligence’) and never challenge the seller’s purchase price,” she warned.

Ms Schreter said it is wise for would-be investors to do their own homework instead of relying on previous owner projections, as well as assuming a worst-case scenario in terms of working out what they can afford.

She recommended seeking out every potential problem in a bid to lower the final asking price and “buy low to sell high”.

Earlier in 2010, David Yezbak, a business broker writing for the Augusta Chronicle, said buying a business could be more beneficial than starting up a firm from scratch.