Our experience in completing successful business sales over the years has taught us to identify some key points that motivate business buyers.
Remember, these are not applicable to every business but should give you a basis that can be applied to all businesses.
1. The Numbers - Numbers tell a big part of the story but buyers are more interested in the future than the past. Let me explain. Ideally, buyers would like to see 3 years of solid growth, increasing margins, etc. The reality is that there are measures that sellers can take to make the best of their numbers. Let’s start with the balance sheet. Borrow sensibly and be careful when calculating dividends to avoid drawing on reserves. The general focus here is to be able to sell a solid balance sheet.
2. Systems & Reporting - A focus on the financial systems and reporting are vital. This information will need to be as accurate as possible
and you should be able to demonstrate this as far back as possible. This means that they are reliable. You must ensure accurate
management accounts are available on request. Other key bits of information such as stock value, debtor, capacities and forward orders
should also be readily available.
3. Customers & Contracts - Do you have contracts with customers? A buyer will often worry that once a business has been purchased any customers not on a contract will be lost. You should ensure that you have a good rapport with all your customers. Try to demonstrate customer loyalty, low churn rates, schedules, and even testimonial letters. This will put buyers at ease before and after the sale.
4. Forecasts - So buyers are essentially looking to buy future cash flow. Many of you sellers out there may hate forecasting and think how am I going to know what the future holds? However, you are in the best position out of anyone to prepare a forecast. A forecast can be as simple as a trading account for the current year as well as the year after which will usually suffice. For larger businesses, it may be a little more sophisticated but you can speak to one of our deal professionals for assistance on how this can be done.
5. Management - If you are looking to sell a larger business you will have to demonstrate how, after the sale, the business will be covered by other members of the management team. For small to medium businesses, this is often not practical because it would mean that the business is carrying too much management overhead. From a buyer’s point of view, they may already have someone they intend to put in the business or even intend to manage the business themselves. The seller can also help the buyer with a clear handover plan. The plan would consist of identifying people in the organisation who could be promoted, documenting key processes and relationships, etc.
If you have any questions you can contact us on:-
T - 0203 637 9766
E - Info@marsuncorporate.com
W - www.marsuncorporate.com