Making a Business Attractive To Buyers

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Entrepreneurs who decide to sell their business should make their business attractive to buyers in order to close an optimal deal. Here are some ways to make a business buyer-ready:

Management structure

Make sure that the business is not overly dependent on the owner. Create a middle-management team and delegate key decisions and critical client relations to them. Buyers should see that the business’ clients will remain to be faithful even if the management changes.

Profitability

Make sure that you have a documented business plan in place that outlines future industry and company growth and clearly examines the profitability of all lines of business. Buyers will want to have confidence in the on-going viability of the business.

Edge

Competitive edge works hand-in-hand with profitability. The buyer must see that the company’s products and services are distinctive and could not be easily copied by competitors.

Culture

The employees, especially the key members of the management team, should know every detail about the business. They should be well-trained and should have knowledge on how everything in the company works.  

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Location

Would potential buyers find the business location attractive? Is everything neat and organized (the warehouse, delivery trucks, and the office)? In the digital sphere, potential buyers should be sufficiently robust so they will be able to access everything easily.

Ultimately the key to building a buyer ready business is to look at the company as a professional buyer would. Buyers avoid risk as much as possible. The more you can do in advance to make your company less risky in terms of owner dependence, customer concentration, and financial reporting accuracy the better position your business will be in when approached by buyers. 

Generational Equity helps middle-market businesses find potential buyers or opportunities for mergers and acquisitions. Visit this website for additional information.

Healthy And Robust: The Driving Forces Behind Successful M&A Deals In Health Care

There is a notion among relatively inexperienced investors that M&A transactions between healthcare providers are risky because of the technical, regulatory, and commercial factors considerations. Such idea, however, is largely misguided.

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According to a study that covered market activities between 1995 and 2008, nearly 60 percent of mergers and acquisitions completed by health care companies had a much higher return on investment compared to pharmaceutical and medical technological indexes in the same time frame.

A closer examination of all the M&A transactions between health care companies reveals common characteristics among the entities. Firstly, through frequent acquisitions of the company of interest, the acquirers steadily develop their strength and framework. According to the data, the companies which yielded the highest returns were frequently acquired, with nearly one closed transaction per year.

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The size of the deal also plays a role in the transaction’s success. The manufacturers that did better concentrated on smaller “tuck-in” acquisitions. They executed the “string of pearls” strategy, where frequent acquisition of small assets resulted in increased and sustainable returns.

Health care companies also invest when other industries do not. They create opportunities which will result in them gaining great value through mergers and acquisitions—when the downturn is more broad-based and extended. For instance, in the 2001 recession, the health care industry overtook the telecom and energy department by as much as 17 percent.

Generational Equity guides owners entering the M&A process in all stages of stock or asset sales, company restructuring, and divestitures. For more about the company and its services, visit this website.