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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.
Good point. I may not have plans to sell my business now, but it doesn’t hurt to make everything attractive for those who may be shopping around. LOL!
ReplyDeleteYou just need to honestly provide them with the information to satisfy their inquiries.
ReplyDelete"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" I guess whats important is that you were able to show evidence to the buyer that you’ve been addressing these risks and everything will follow. It will give the buyer more confidence that the business is a good investment.
ReplyDelete