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Want Number vs Need Number

Two different prices: the amount you would love to get for the business, and the amount you actually need to net to fund the life you want next.

The Two Numbers​

Every seller carries two figures into a sale, and confusing them is costly. The need number is the personal-finance floor: the after-tax proceeds required to fund your goals, pay off debt, and cover the expenses you used to run through the company. The want number is the dream price, the headline figure you would celebrate. McDannell makes separating them the first move of her "start from the end" planning, because the two numbers drive completely different decisions about whether, when, and to whom you sell.

The distinction matters because the two figures answer different questions. The need number tells you whether an offer is even worth considering. The want number tells you what to aim for while you prepare the business and run the process.

What the Business Is Worth vs What It Is Worth to You​

Warrillow frames the same split from the valuation side: there is what your business is worth on the open market, calculated through assets, discounted cash flow, and comparables, and there is what it is worth to you personally.

"What's your business worth vs. worth to you"

Warrillow, The Art of Selling Your Business, ch. 12

Market value is set by buyers. Personal value is set by your life. When the market value clears your need number, selling becomes rational; when it does not, you either keep the business or build more value before going to market. Burlingham puts this self-knowledge at the foundation of a good exit. Setting a number and a timeframe is the work of his exploratory stage, and skipping it is how owners end up selling for the wrong reasons.

"Nothing will have a greater impact on your business than having a deep knowledge of yourself."

Burlingham, Finish Big, ch. 2

Why You Never Reveal Either Number​

Knowing your numbers is for you, not the buyer. Warrillow is emphatic that naming a figure first hands the buyer your ceiling.

"If you blurt out your number, you will forever put a hard ceiling on what your company is worth in the eyes of the potential buyer."

Warrillow, The Art of Selling Your Business, ch. 12

The seller's job is to demur and invite a reasonable offer, then nudge it upward. The need number is your private walk-away line. The want number is your private target. Letting either slip turns your own planning into the buyer's anchor.

Closing the Gap​

When the want number sits far above current market value, the difference becomes a planning problem rather than a reason to give up. McDannell's reverse-engineering treats the gap as something to close before listing, through the steps that raise value: reducing owner dependence, documenting processes, and cleaning up the financials. The want number functions as the destination; the need number functions as the minimum acceptable result.

"A company is worth what someone is willing to pay for."

McDannell, Get Acquired, ch. 2

That is why both numbers are needed. The need number keeps you from accepting a deal that fails your life. The want number keeps you from selling for less than the business could command once it is prepared and put in front of competing buyers.

Further Reading​

Sources: McDannell, Get Acquired ch.2; Warrillow, The Art of Selling Your Business ch.12; Burlingham, Finish Big ch.2