When a buyer considers acquiring a business, they are mainly looking for three key qualities:
- Operating profit
- Security of these profits
- Transferability of business operation methods
In addition, a professionally managed business will include many of the following features and as a result will be appealing to a wider range of potential buyers.
- Established for at least 3 years
- Have full financial records & corresponding tax returns for at least 3 years
- Show growth in sales and profits over recent years
- Show at least $150,000 earnings p.a. for two working owners (or $100,000 for 1 owner)
- Show potential for further growth
- Allow owner operators to work no more than 5 days per week and less than 30-40 hours a week
- Have better than average condition of plant & equipment
- Have continuing and reliable staff (and management team, if applicable)
- Have a good and saleable inventory of stock at efficient levels
- Have a formal lease for a minimum of seven years (including options) at an acceptable industry related rental
- Have tidy, easily maintained and well constructed freehold premises (if applicable)
- Be suitably located
- Have a niche market or barriers to entry
- Have a well diversified customer base
- Sales income not dependent on personal relationships established with the owner or key personnel in the business
- Have a well-developed marketing plan and materials
- Have a written management and operations manual
- Have a genuine reason for sale
- Have protected patents, registered designs or any other intellectual property
- Have a brand that has value in the marketplace
- Have full transition assistance from the seller of the business
- Have other businesses close by that provide synergistic benefits
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Disclaimer
This article is provided with the compliments of Alan Dinnie. It is genuinely intended to offer readers information to make better decisions and to give insight into various aspects of business in general, and more particularly related to the sale and purchase and management of businesses.
All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but may be subject to errors and omissions. No statement is made as to the accuracy of any description. Alan Dinnie makes no warranties or representations regarding the information and excludes any liability which may arise because of the use of this information. This information is the copyright of Alan Dinnie.
Nothing herein shall be construed as legal, accounting, or other professional advice outside the realm of real estate and business brokerage.
I trust you enjoy the article and that it provides you with useful information.
To your business success
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