What would a potential buyer look for?
1. Motivation of the Owner(s)
Any potential buyer will be interested in the motive for the owners of the business to sell.They will be interested in what has brought the owners to this point? Buying and selling a business is a very emotive decision and any buyer will want to know that the seller is committed to the sale and he or she has gone through a process to establish their decision. They will be asking themselves whether the owner has a specific plan in place regarding what he or she will do after exiting the business. Buyers will be concerned that a lack of a plan may indicate that the owner is not committed to exiting and that the owner may change his/her mind just before closing.
Most businesses do not have any kind of exit or succession plan normally because they’re not sure exactly how to start the process or whom to call for help. They may have difficulty discussing financial matters and personal goals without others (or outsiders) because it is too private, somehow unpleasant, or considered taboo.
Business owners often spend all their time “putting out fires” and do not have the time to focus on long-term planning; the entire process seems too daunting. It may be that business owners do nothing because they’re afraid of what life without their business would be like.
If the business owner does have an exit plan in place then often they have focused on just one or two elements of a succession plan, such as an estate plan or management succession, and have ignored other equally important areas. This situation usually results in business owners, making poor decisions, are not achieving all of their personal and business goals in the process and not being able to provide the buyer with sufficient or accurate information.
The exit planning process involves helping business owners wrestle with several issues, including their fear of letting go, their desire to avoid the stress and conflict it may cause and not knowing when they need to start.
This article is starting a series of articles about what factors buyers of businesses look for to help you enhance the value of your business, if you have decided to exit the business in the next 3 to 5 years. If you need help and would want to discuss further you can call Bob Jones on +44 844 873 623 or e-mail him at firstname.lastname@example.org