What business buyers want and preparing your business for saleIf you are thinking of listing your business for sale then it makes sense to present it in a way that will make it more attractive to potential buyers, ensuring you maximise your sale price. Prior to putting your business on the market it helps to get your business sale ready in order to get your best result.
Business buyers are looking for cash flow, something they can add value to, and something that has a good upside. This can be very useful in determining how best to package and market your business for sale. It’s all about keeping your buyer’s needs and wants in mind throughout the sales and marketing process. So why would a buyer want to buy your business?
First impressions count, so if any area of your business premises is looking
neglected, now is the time to sharpen it up and re-paint or redecorate as
required. This includes cleaning plant and checking any outstanding maintenance
work is carried out.
Sell or dispose of any obsolete assets or stock that are not essential to the running of your business. This helps keep the sale price down and provides a return on dated or surplus stock or redundant equipment. Compile a comprehensive list of plant and equipment that is part of the sale. Also don't forget to tidy your customer databases, formalise any verbal agreements or contracts, and detail systems and procedures to increase the value of intangibles. Perhaps the most important aspect in attracting quality buyers is having a good set of accounts. Ensure your accounting and bookkeeping are up to date as buyers may need to satisfy lenders that they can support their living commitments, as well as service any loan from the business' earnings. Most banks like to examine three year's previous financial history to satisfy their requirement.
Business buyers usually look first at the bottom line and if it interests them, then they work their way back up through the accounts. Ideally the bottom line needs to look good and reflect a healthy business, or at least reflect the potential for future profit making.
Although cashflow and profitability are important to buyers, there are also other aspects that will be of interest. Buyers are often seeking release from a 9-5 job and the freedom of managing their own destiny. Varying aspects of your business will appeal to different buyers, and there will be buyers out there just wanting to research and compare many options prior to making any offer. Watch that you are not just research and that they actually possess the necessary courage to commit to buying a business.
Understand your buyer’s needs and market your business accordingly; what are their motivating factors – why do they want to buy a business and how does your business fit? Help them see the potential in your business and how their skills and experience will only make it better. Make sure the cash flow is looking good, and that the goodwill is easily transferred with the business. How are they placed financially (have they the money), and will they need business finance to fund buying your business? Have you considered offering vendor finance to help fund a suitable purchaser into your business?
Training or transition periods can help. Your buyer may have never owned a business before and could be anxious about getting into your industry. Consider providing training to ease the transition and use this as a trade-off against concessions that are more valuable to you.
Understanding your buyer's needs is important in determining how best to pitch your business around what is important to you and the buyer, and what is needed to make the sale happen.
By Richard O'Brien - aubizbuysell
Share this article:
- How to sell a business
- Profit vs value when selling a business
- Why have a business exit strategy
- The process of selling a business
- Who will buy my business
- Your options when selling a business
- What do business buyers want?
- Write a better business for sale ad
- Marketing your business for sale
- 7 business exit strategies
- Selling a business to get your best price
- Keeping your business relevant
- 5 Questions before you sell a business
- 10 questions to ask your business broker