When finding a buyer for your business, quality sells
As corporate finance advisers, we often speak to shareholders who feel they are ready to sell but are unsure whether their business possesses the characteristics that would typically attract a buyer.
Although buyers consider various aspects when approaching an acquisition (including financial performance, management team, customers and market conditions), ultimately, a successful sale comes down to overall perceived quality of the business. Buyers want to find out both what your business can offer today and in the future too.
When preparing for an exit, it can be useful to identify potential risks within your business and devise a strategy to address these issues. This allows quality to be enhanced and will provide opportunities to place the business higher in its range of multiples.
Ask yourself the following questions: Are you over-dependent on a single customer, supplier or market sector? Is your EBITDA sustainable? Can margins be improved? Would you benefit from capital investment? How strong is your management team? Can you show a track record of winning new customers or developing new products? Is your business growing? Do you have a competitive advantage? How would your business fare if you weren’t there?
Your answers should help you understand which areas of your business may require attention prior to marketing the business for sale.
If your answers aren’t quite what you anticipated, don’t be concerned. It’s completely achievable to improve the quality of your business, but early preparation is key.
The first and most important step of starting the sale process is to seek impartial advice from an experienced specialist. From here, objectives can be set and strategies put in place to help you achieve your goals in the most efficient and valuable way.
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