What Does A Buyer See?

You have decided to sell your business.
What does a buyer see when they look at it?

We have spent some time getting your business ready for sale. Valuing and pricing your business correctly, getting your house in order, and finding the right buyer are things you can and must control. But what does a buyer see when looking at your business?

Here are 5 things a buyer will evaluate when looking at your business

Business Valuation and Financial Health

This has been covered extensively but it bears repeating; the numbers matter. Your buyer wants clean books and a value that is both fair and provable. No buyer goes any further without this in place.

Reason for Sale

Buyers want to know why the business is for sale. Reasons that are encouraging to potential buyers include retirement or other personal life changes (moving, health reasons, etc.), pursuing other business interests (buying a farm, starting a different business), or the fact that the current business has outgrown the owner’s ability to run it. Red flags for a business buyer include selling to get out of legal or regulatory troubles, declining business or market share, or just generally vague answers from the owner.

Legal and Regulatory Compliance

Pursuant to the above, buyers need to know that your business is in legal and regulatory compliance. You need to be able to demonstrate this.

Reputation and Customer Base

Let’s face it, unless a buyer is buying your business for the assets alone, they need your reputation and customer base to succeed. You have to be able to prove you have both. This can include select customers as references or providing testimonials (care taken to ensure proper discretion), and having a stable, long-term customer base. Your books will show which customers are profitable or not; too many unprofitable ones is a giant red flag.

Operational Systems and Infrastructure

The new buyer needs to be able to come in and run the business. Can they? Are the key processes clear and documented? Are they automated? Are you as the owner doing everything or is there a staff in place that the new buyer can rely on? A business where everything is done manually and not well documented is a red flag for anyone trying to come in and run it without you.

Taking care to address these things as your business goes up for sale will ensure you get the right buyer paying the maximum for your business.