Having talked with 100s of buyers and potential business buyers at all levels, there are 3 issues that we hear consistently:
- “I’m looking for a business with a minimum cash flow of X….” or some variety of that statement. X is the amount that the business provides the buyer after all expenses, including debt, has been met. This could be $150,000 in SDE or $5.5M in EBITDA. It is important that your financials are in order … as well as can be. Easily understandable and provable financials lead to successful transactions at higher prices.
- “What is the company structure?” Here, the question focuses on the business owner’s role and if she or he is ‘the business’ or an integral part to the cash flow. A good management team, systems and processes, increase the value and lends toward an easier sale.
- “Why is the owner selling?” In other words, what is the owner planning to do, why are they selling now and what are the future plans. No buyer wants to buy a business and have the current owner open up a new business, take the customers or employees or have knowledge that something is not quite right with the business (e.g., anyone want to buy a phone booth company)?
By knowing what a buyer wants…and let’s be honest, what a business owner would look for if purchasing a business…, you can maximize the likelihood of selling your business on your terms at the right time.