Business Owners: It’s A Seller’s Market!
BY: Jordon Geiger
- Strengthening revenue and profit numbers (28 percent)
- Increasing number of owners looking to sell (21 percent)
- Increasing number of qualified buyers on the market (19 percent)
- Is your business ready to sell? You can’t start putting things together the month before you sell. To fetch the best price for your business, make sure you can produce two to three years of tax returns that are accurate and show maximum profitability.
- How is a buyer going to value my business? According to Capital Valuation, buyers are motivated differently and perceive risk differently. For example, an undiversified passive investor may have much lower enterprise value than a strategically positioned business. Know what buyers are out there and position your business to those whom present higher enterprise value.
- Who should be on my team when I sell? This is paramount. It’s important for entrepreneurs to understand whose services will bring them through the sales process and help them get the best price for their business. In Dane County, we are very fortunate to have some of these very well esteemed professionals. Look around to find partners that fit best with your desired outcome.
- Can my business thrive without me? If a buyer is concerned that a business is too dependent on the owner or a single customer, that may be reflected in the offer price. Be aware of the risks for a potential buyer.
- Would I be willing to stay on if the buyer wants me to? This inherently reduces the risk for the potential buyer, but if it seals the deal, is it worth it to you to stay on and work for the purchaser for a specified term of say, six months or a year?