paybacksa - 9:46 pm on Mar 17, 2005 (gmt 0)

It doesn't take so much analysis. If you want to know how much to offer a small business owner for her business, when she has offered it up for sale voluntarily, just try this fun method:

Take the owner on a 5 day golf/ski/whatever vacation. Pay for it all. Tell her to bring the husband, kids, whatever, and you do the same. Plan to get to know each other better and talk business sensibly over good food in a cozy resort. The total cost is less than the cost of a goof arbitration lawyer so consider it a pro-active investment.

In your mind, set a very low bid for her business. After all, ther are so many unknowns!

By the end of traveling TO the destination, you'll have a good sense of her organizational skills (met the limo, arrived on time, settled in calmly, socially adjusted individual) and her ability to handle uncertainty and share control. Is she "my way or the highway" or "my way or the right way" or "my way or...no worries"? You'll have vetted the control freaks by the end of day 1, and can adjust your virtual bid upwards.

By day two you've tested delegation skills and stability of the business she left behind. Is she on the cell all day? Managing crisis after crisis? Yelling and screaming, or calmly answering questions? Is she gettingfrustarted and angry, or directing soundly? Do her "people" seem to be listening? Do they need to be told *everything*? Remember... if you buy a business you buy someone else's "issues". At the end of day 2, you can raise your virtual bid if it seems the business can survive the loss of it's owner.

By day three you really know who's who. This person is penny-wise and pound-foolish, or appreciates quality? Willing to think first to ensure a quality decision, or a hasty-decider who prefers to manage-after-the-fact? If it was golf, you should know much more by now :-) I am sure each activity has it's own way of easing out the character traits...

If there is a day four, raise your bid considerably. After you buy her business, you will appreciate her availability for questions and advice, because you can learn alot from her. Unless you pay her a fair premium, she'll probably become your worst competitor before you can say "boo".

Bottom line: business is about people, and people are predictable if you can get enough background information.