Why Business Owners So Often Walk Away from Very Good Offers, by Ken Hachikian

In my experience, business owners frequently become irrational when presented with an offer to acquire their business, particularly when that offer meets or even exceeds their stated expectations. After setting a target valuation and seeing it achieved in the marketplace, many owners unexpectedly decide that the price is no longer sufficient. The bar is raised, sometimes dramatically, and the opportunity evaporates.

Why does this happen so often?

Consider a few real-world examples.

In one case, a healthcare services company was generating approximately $2 million in annual earnings. The owner stated clearly that he would be prepared to sell the business for $10 million. Through a structured extensive investment banking process, we secured a credible offer of $12 million. No other buyer came close. Upon receiving the offer, however, the owner concluded that the business was “really” worth $16 million and refused to proceed unless the buyer increased its price. The buyer declined.

One year later, earnings had declined to $500,000. The business was worth nowhere near $12 million. Today, with earnings having largely disappeared, the business has no meaningful value.

Why would an owner walk away from what appears, in hindsight, to have been an excellent outcome? The obvious answer is greed. But the more accurate explanation is more nuanced. The owner reasoned that if a sophisticated buyer was willing to pay $12 million as an opening offer, then the business must be worth substantially more.

Further, what the owner failed to recognize were the potential underlying risks. He was not a full-time operator and had multiple outside interests competing for his attention. He assumed that current earnings were sustainable indefinitely and discounted the possibility of operational disruption, competitive pressure, reimbursement changes, or broader shifts in the business climate. By rejecting the offer, he effectively placed a $12 million wager on the future—and lost.

A second example illustrates the same dynamic at a larger scale. This business was earning approximately $10 million annually and operated in a rapidly growing segment of its industry. After reaching out to numerous potential investors, we received multiple offers in the $80 million to $100 million range. Confident that earnings would continue to grow, the owners decided to hold on.

Once again, risk was underestimated. Within three years, earnings had fallen to $1 million, and enterprise value declined accordingly. What had once been a life-changing liquidity event disappeared.

In both cases, the owners shared several characteristics. First, they were inexperienced in the process of selling a business and evaluating acquisition offers. They failed to appreciate that when an extensive, competitive sale process is run by an experienced investment banker, the resulting bids generally reflect fair market value. The market, not the owner’s aspirations, determines what a business is worth at a given moment in time.

Second, the owners underestimated the risk of the unknown. Future challenges—regulatory changes, customer concentration, key employee departures, technological disruption, or economic downturns—are often invisible when current performance is strong. Buyers price these risks carefully. Owners, by contrast, frequently assume continuity and little risk.

Finally, and perhaps most importantly, in both examples, the business represented virtually all of the owners’ net worth. This concentration led to an overly proprietary and emotional view of value. Rather than stepping back and evaluating the offer objectively, the owners became anchored to what the business could be worth under ideal circumstances, rather than what the market was willing to pay given real-world risks.

The irony is that many of these owners initially articulated reasonable expectations—and those expectations were met or exceeded. Yet once faced with a tangible offer, psychology intervened. Anchoring bias, overconfidence, and loss aversion combined to create the belief that accepting the offer meant “leaving money on the table,” even when compelling evidence suggested otherwise.

The lesson is straightforward. If a thorough investment banking process has been conducted, with broad outreach to qualified buyers and competitive tension, business owners should give serious weight to the resulting offers. If the market delivers a price that meets stated objectives, the rational response is to accept it. The future is uncertain, and value that exists today can disappear far more quickly than most owners expect.

In the sale of a business, discipline and objectivity are worth far more than optimism.