What are Buyers Seeking?
Vendors and purchasers see things so differently. A vendor presents the past and a buyer worries about the future. Value to the vendor is one thing. Value to a purchaser is another. The key to maximising sale proceeds is to bridge this gap and help the buyer make a leap of faith.
Generally, buyers of businesses either large or small like to see, as a minimum, the following:
- Clear track record of financial history and growth preferably without too many explanations required.
- An acceptable return on total funds invested (see valuation).
- Credibility through a fair representation of value in both tangible assets (plant and stock) and intangible assets (goodwill and intellectual property).
- Something left in it for the next person i.e. an opportunity for the purchaser to take the business to another level.
- Security in the Intellectual Property whether it be in non-reliance on any one customer or supplier, a decent lease term (if that’s critical to the business), personnel in place or proven systems.
- A factual, relevant, non-exaggerated and credible Information Memorandum which paints the business picture in a positive but realistic light and imparts confidence, not only to the buyer but to their advisors and financiers.
- A business that is “readily transferable” … not too reliant on the owner and with quality staff and systems in place.
- A business with a valid sustainable point of difference and preferably some barriers to entry.
Other relevant comments are noted under “How to Maximise the Sale of Your Business”