What are Buyers Seeking?

Chilman Mt Bogong

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:

  1. Clear track record of financial history and growth preferably without too many explanations required.
  2. An acceptable return on total funds invested (see valuation).
  3. Credibility through a fair representation of value in both tangible assets (plant and stock) and intangible assets (goodwill and intellectual property).
  4. Something left in it for the next person i.e. an opportunity for the purchaser to take the business to another level.
  5. 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.
  6. 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.
  7. A business that is “readily transferable” … not too reliant on the owner and with quality staff and systems in place.
  8. 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”