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UNDERSTAND WHAT BUYERS ARE LOOKING FOR
MANY BUSINESS BUYERS SEEK THESE FEATURES
1. Safety, then profit.
2. Owner compelled to sell.
3. Firm can pay buyer more first year than buyer’s present salary.
4. Profitable for at least two years.
5. At least 5 years old.
6. Not growing faster than its industry average.
7. Premises lease term sufficient for payback of buyer’s investment.
8. Industry not saturated with competitors.
BUYERS LOOK FOR THESE PROBLEMS
Desirable ones affect the owner:
? Divorce
? Death
? Disability
? Burnout
Undesirable ones affect the business:
? Unprecedented loss of sales
? Catastrophic natural event
? Uninsured damage or legal claims
? Owner dies without succession plan
Street-smart business buyers prefer to acquire a profitable company whose owner has suffered a personal catastrophe. The owner’s motivation to sell is high because his business can destruct very quickly. He faces liquidation if he does not find a buyer. A buyer can be the seller’s saviour by offering a win-win deal.
Always be prepared to sell
SELLER PENALTY FOR NOT PROPERLY PREPARING
? You appear foolish if you make a bad first impression.
? Instead of quickly meeting buyers that meet your criteria, it can take months (or never) to discover one.
? The price a buyer will pay for a company can substantially decline the longer it takes to sell?due to factors controllable by properly preparing the company for sale and astutely bringing it to market.
ALWAYS THINK ABOUT SELLING
It is a mistake to defer planning the sale of your business until you want to cash out. What if your business suffers a crisis or your sudden illness forces you to sell? A rushed or forced sale plays into the hands of bargain hunters.
To avoid selling your business for less than it is worth, always be thinking about the possibility of selling. Start a file: “Sale of Business.” Do this many years before you intend to sell. Then, learn about selling from buy/sell experts, so you are astute when the time comes to sell.
Now is a fabulous time to sell a company
Investors flush with stock market profit and corporate downsizing has created a horde of business buyers. Moreover, enlightened small business owners know that acquiring their competition is a profitable way to beat their competition.
Next month, we will talk about two important questions you need to ask potential buyers – you will save time and reduce your risk if you can quickly screen potential buyers.
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