What Are Buyers Looking For?

What Are Buyers Looking For?
When in the process of selling a business, it is always a good idea to step into the buyer’s shoes and channel their thought processes. This exercise will help you better understand their mindset and answer the question, “What are buyers looking for?”

While businesses can be very diverse in their operations and service offerings, they do have many of the same basic structural components in common. These basics the main focus of buyers when deciding if they would like to purchase a business. The following discussion will look at a few of the components that attract buyers to a business.

Profitability – let’s tackle this topic first! Buyers are often attracted to a business demonstrating positive trending growth and profitability is one metric that measures this. While this is not the only metric of growth, a buyer could also look at cash flow, customer contracts, and seller’s discretionary earnings, it is a good place for a buyer to start their research.

Records & Books are a significant piece of a buyer’s attraction to a business. Not just having a box of receipts and some folders, but having long term, well organized, clean records and books inclusive of Financial Statements, Balance Sheets, P&L Statements, Tax Returns, Sales Volumes, Purchase Documents, Suppliers, Inventories, and Customer Lists that can show the track record of the business. The more a buyer can understand the history of a business and where it can go in the future, the more at ease they will feel with purchasing said business.

Ownership Involvement is another great area that a seller can effect that has a bearing on a buyer’s attraction to their business. If the current owner is highly involved in the daily operations of a business, then a buyer may have difficulty stepping into the company and being successful. But if the current owner has good management in place that already knows the ins and outs of daily operations, a buyer could easily step into that business and start off successfully right off the bat. The bottom line here is the less involved a seller is in their business, the easier a transition to a buyer will be, thus that business is more attractive.

Standard Processes & Procedures are a truly beautiful thing within a business for sale. They ensure that there is rhyme and reason to daily operations and that there is consistency and metrics to stand by. A buyer will see the value of purchasing a company where employees and management will be on the same page due to standard operating procedures that can be counted on from day to day.

These four areas are only a taste of what attracts buyers to a business, but they are a great starting point for a seller to review and reflect on within their business and find room for improvement. If you are a seller or are thinking of selling your business in the next few years, Transworld Denver would like to invite you to learn more about our Prep to Sell program.

For more information on how our Prep to Sell program can help you prepare your business for sale, please visit our website or schedule a consultation with one of our brokers today!

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Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master’s Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.