What do business buyers want?If you are thinking of selling your business then it makes sense to present it in a way that will make it be more attractive to potential buyers, consider what business buyers want thereby maximising it's value. If time is a luxury that you have prior to putting your business on the market, then use it wisely and prepare well for the future sale.
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 and stock that are not essential to the running of the 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 years previous financial history to satisfy their requirement.
Traditionally buyers usually look first to the bottom line and if what they see 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 wanting to research and compare the options prior to making any offer.
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 business buyer, and what is needed to make the sale happen.
To help build the value in your business and make it more saleable for the day you sell a business - then download your FREE Business Seller's Checklist here.
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By Richard O'Brien - nzbizbuysell
In this category:
- Selling your business?
- The business sales process
- Who will buy your business?
- How to list a business for sale and sell
- What do business buyers want?
- Options when selling a business
- Marketing a business for sale
- Valuing a business for sale
- Difference between profit and value
- 5 Questions before you sell a business
- Selling a business and getting a good price
- Advertise to target your business buyer
- Why have a business exit strategy?
- Ad images for better business sales results
- Why use a business broker
- How to keep your business relevant
- Get more when listing your business for sale
- 12 questions to ask a business broker