One of the key elements to successfully selling your business is understanding what buyers are looking for as part of their due diligence. Typically, buyers will employ accountants and attorneys to look at financial and legal issues. But the savvy buyer will also be looking behind the curtain to uncover any skeletons in the closet. Business owners who anticipate these questions and inquiries will be a step ahead.
If you’re getting ready to sell your business, here are four major areas where you can and should anticipate buyers to look very closely:
- Finances
A qualified, savvy buyer is looking for companies that have monthly financial statements and annual financials prepared on a timely basis. They are looking at bank credit lines and if a bank or creditor has issued any kind of credit watch on the company. Timely bill paying and checking the gross margins for the past several years will also give a potential buyer a clearer picture of how the company has handled financials.
- Management
Buyers will also be looking closely at the management of a potential purchase. Red flags would be significant management turnover over the past few years, a business owner who is constantly fielding phone calls and putting out fires, and the overall culture within the employees themselves. Potential buyers are hoping for employees that take pride and ownership of a business.
- Manufacturing
Buyers will be wary of a business with a stagnant or dying market. They will examine inventory turnover and number of suppliers as well as the company’s potential to rapidly make changes or enter new markets as changes demand.
- Marketing
If your business is introducing new products or services or experiences a loss of market share, potential buyers will want to know. They were also look at prices compared to the competition and look at sales numbers in terms of units instead of dollars.
Sellers will reap big dividends by anticipating these areas of concern and making any changes necessary to resolve outstanding issues. At Regal Consulting Corp., our professional team of business brokers has years of experience helping clients sell businesses in New Jersey, Pennsylvania, New York, and Connecticut. Our expertise, integrity, and marketing tools ensure we price your business appropriately, identify a qualified buyer, and close the deal. Call us today and we can begin with a thorough business valuation and exit plan.