What Buyers Are Interested In?
Generally buyers (except in some exotic situations) are looking for two things:
- Return on investments
- A going concern
A ”going concern” is a fancy term for the company’s ability to continue profitable operations in the future. Sure, investors worry what will happen to the company after you will walk out of the door. Will it run smoothly or will it collapse soon after?
Those two variables are mutually dependable. If you can prove that your company can be operated by another person, that proof takes off a lot of pressure on ROI side. Buyers are more willing to pay for something that will work for a long time. High ROI is just compensation for the risk of the business going belly-up in a year or two.
A conscious buyer looks at the quality of the reporting system first. Is the accounting done in-house or outsourced? Is it current or is only last quarter is available? What reports does the owner review regularly? And so on…
The business web site is also important. The company web site is the tool of first impression. If the buyer is not impressed, the company’s clientele probably is not either.
The smart buyer looks at financial ratios. If the seller’s gross margin is higher than the industry average, that helps the buyer to reduce the discount rate (ROI requirement). Suppressing the discount rate by 5% can leave tens of thousands of dollars in your pocket.
Business Development Advocates helps to build a state-of-the-art accounting and online marketing system that will make your company appealing in any investor’s eyes while boosting its market capitalization. Call us for a free preliminary evaluation of your business