What do buyers look for in a business?

If you’re considering selling your business, it’s important to know what buyers are looking for. Take the time now to take a hard look at your business. What will be appealing to buyers? What do you need to address before going to market? Here are key components buyers seek out – and that you need to provide.

Strong management that will stick around – Employees can make or break a business. Have experienced managers in place who will provide continuity after the sale. Prospective buyers will be thrilled to find trusted leaders poised to stay for a transition period or even longer.

A diverse customer base – An established customer base is appealing to any buyer. And if those customers represent different consumer demographics? Even better. Consider how you can demonstrate a large, loyal customer base. Whether it’s social media, a killer mailing list, long-term contracts, or customer engagement, buyers will be impressed.

Strong profits that are consistent – If you have been successful and sustained that success, buyers are going to be interested. Even once-healthy businesses can become a bad risk if revenue and profits are in a downward spiral or the business is saddled with extensive debt.

Little or no dependence on owner for future success – If you got hit by a bus, would your business survive? Many businesses rely heavily upon their owners. But for your business to be appealing to buyers, it must be able to succeed if you weren’t in the picture. Buyers like to see that you have groomed one or more employees to step in, even if you plan to stay on after the sale.

Differentiation in the marketplace – Your business should offer products or services that are distinct from the competition. As a result, the business will enjoy a strong market position. Potential buyers will scrutinize your offerings and processes to see how the business will be able to sustain its market position – or expand it.

Manageable business risk – All business comes with risk, however buyers are attracted to businesses that effectively manage it. Managing internal risk like equipment failure can help a business better withstand external risk like legal regulations. Understand your risk, manage what you can, and show buyers how you can withstand the rest.

Strong operating margins – Showing income is the first step. But serious buyers want to know how much of your income is profitable. Healthy operating margins vary from industry to industry. But if you can account for volume and show how your margin compares to your competitors? That’s powerful data that will draw buyers in.

Immunity to the Amazon effect – Everyone’s favorite online retailer has disrupted the retail market and continues to shape the evolution of e-commerce. If your business is at the mercy of Amazon, you could be in trouble. But if your business isn’t affected by these ever-changing markets, buyers will take notice.

Preparing now can attract the right buyers and drive up the sale price. It can also make the transaction run smoothly. If you’re ready for an expert to guide you through the process, contact O’Keeffe & O’Malley. Call us at 913-648-1085 for a confidential meeting.