First offer pricing in small and medium-sized firm sales: Developing a scale for practitioners

ABSTRACT

This research offers practical insights into the emotional factors that small and medium-sized enterprise (SME) owners consider when setting a selling price for their business when transferring ownership to nonfamily successors. Many SME owners rely on their personal experiences and emotions to determine the initial offer price, which can often lead to failed transactions if the price expectation does not reflect the true value of the business. However, existing research on this topic is limited, and there is no standardized measurement scale to quantify the impact of emotional factors on the first-offer price. This article introduces a newly developed hands-on scale and explains its use for practitioners such as SME owners, successors, advisors, and other parties to reflect on the owner’s emotional motivations for setting the initial offer price.

KEYWORDS:

• Business sale
• business transfer
• valuation of business
• emotions during sale

Disclosure statement

No potential conflict of interest was reported by the authors.