Fear of Being Lowballed — What You Need to Know to Sell at a Fair Price

"What if They Take Advantage of Me?" — A Real and Legitimate Concern

"If I don't know what I'm doing, I'll end up selling for way less than the business is worth."

This worry is one of the most common things we hear from owners considering succession. And it's not entirely unfounded — information asymmetry in M&A negotiations is real.

That said, if you go into the process with some knowledge, selling at a fair price is entirely achievable. This page explains what you need to know to protect yourself.

Why Lowballing Happens — Three Root Causes

1. The Information Gap

Professional buyers — M&A firms, investment funds, experienced acquirers — have completed dozens or hundreds of transactions. Most owners have done exactly zero. This disparity in experience and knowledge creates an opening for unfavorable terms.

2. Urgency Working Against You

"I'm getting older and want to close this out." "Dealing with the succession problem has been exhausting." Stress and time pressure weaken your negotiating position.

3. Not Knowing What "Fair" Looks Like

If you don't have a sense of what your business is worth, you can't evaluate whether the price you're offered is reasonable. A number that sounds big might be significantly below fair value — you wouldn't know.

Five Ways to Protect Yourself and Sell at a Fair Price

1. Know Your Business's Approximate Value Before Entering Negotiations

Before any serious discussions, run a rough calculation using standard methods like an EBITDA multiple. (See our article: "What Is My Company Worth?") Simply having an informed reference point changes how you engage in conversations.

2. Talk to More Than One Potential Buyer

Negotiating with a single party and then accepting or rejecting their offer gives you no baseline for comparison. Engaging with multiple candidates simultaneously lets you compare terms — and lets each party know they're not your only option.

3. Retain Your Own Advisor

A tax accountant, lawyer, or independent M&A advisor who works for you — not the broker or the buyer — is invaluable. It's important to understand: M&A brokers are typically paid by both sides and are not primarily working to maximize your outcome.

4. Don't Negotiate Under Time Pressure

Urgency — driven by age, health concerns, or emotional fatigue — is the single biggest factor that costs sellers money. Starting the process early, while you have time to be selective, is one of the most effective things you can do.

5. Evaluate Conditions Alongside Price

A headline price that looks attractive may come with conditions that reduce its real value: no employment guarantees, earnout provisions that can reduce your total payout based on post-sale performance, or long transition requirements. Price and terms must be evaluated together.

The Hidden Cost of M&A Broker Fees

If you engage an M&A broker, their fee is typically 3 to 5% of the sale price. On a ¥200 million deal, that's ¥6–10 million going to the broker.

This is not inherently wrong — brokers do provide value in certain situations. But you should understand the structure clearly going in.

Relay Partners is a direct buyer. There are no broker fees in any of our transactions.

Questions to Ask When a Price Feels Low

If a valuation doesn't feel right to you, you're entitled to push back — politely but directly:

• "Can you walk me through how you calculated this figure?"
• "What methodology or comparable transactions did you base this on?"
• "Which businesses in my sector are you benchmarking against?"

A buyer who can't answer these questions clearly and transparently is not someone you should trust with your company's future.

Summary

The best protection against being lowballed is showing up informed.

Know your business's approximate value. Talk to multiple parties. Bring in an advisor who works for you. Start early enough that you're not negotiating under pressure.

None of this is complicated — but it requires preparation.