Is your business attractive to today’s Buyer?
Business Sellers should be aware of the features that make your business saleable and that will attract a premium sale price. The typical premium buyer wants to enjoy life as well as own a business. This buyer wants as much disposable income as possible and the time off work in which this money can be enjoyed; they want a Lifestyle not a Job.
The following will be part of any educated buyers initial requirements;
- Suitably located, Buyers who need to relocate will be the most difficult to please with that hurdle.
- First Impressions, well presented and maintained premises that looks easily workable will retain buyer interest.
- A niche market, high barrier to entry or Exclusive Product with high demand.
- Well diversified customer base with user friendly historic transaction history.
- Genuine Reason for Sale.
As interest increases on your business these “must have ticks” will be on a Buyer’s short list and basis of Due diligence Investigations.
- Full transparent financial records of at least 3 years.
- A functional and detailed Client and Sales Data Base.
- Strong financial growth, (reducing sales are a big hurdle)
- Net at least $100K including fringe benefits expected for taking a Commercial Risk. The bigger the bottom line the better your chances.
- Owner to work only 5 days per week or less in your Business.
- Continuing and reliable staff in place or a desirable place to work.
- Lease; Buyers and Lenders will require a Lease with a minimum 6 year remaining or longer. Ideally at an acceptable industry rental, no demolition clause and a favourable option period.
- Sales Income not dependent on the Seller’s skills, personal relationships or only a short list of Clients.
- A well-developed strategic Business Plan including easy to follow written management and operations manuals.
- Plant and Equipment up to current technology and in good condition.
- Records to show all stock is saleable and at efficient levels.
Buyers gut feelings or when emotion will seal the deal;
- Buyer’s and Sellers both have Benefits, Fears, Frustrations, and have Wants and Aspirations that also need to be satisfied by your business. One of the greatest fears is that the goodwill or continuation of the business will disappear when the owner leaves. To minimise this fear the business owner must give more responsibility to the staff in all departments. The more the business operates without you, the greater the Benefits and lessor the Fears. Written Contracts with Clients and Agreements with Suppliers are unusual but Gold when the time comes to sell. If nothing else Business Owners should also strengthen their industry networks and strategic relationships and develop B2B partnerships which generate repeat turnover.
- To summarise; to achieve the best price, on the best terms, in the shortest and least stressful time, your business should display the key indicators of value. Make the business operate without them and have a long term lease at a fair rent or alternatively own the freehold premises.
A Qualified and Experienced Business Broker will highlight all of the above to enhance value in their Information Memorandum, contact Adrian Coyne so that we can reduce your fears and see our Systemised Processes.