A new piece in SmartCompany pulls together three advisers on what makes a business saleable. The buyers are there and the demand is real. The work that gets a business across the line starts twelve months before you list, and it’s work most owners haven’t done yet.
What the source piece flagged
A recent SmartCompany piece on selling your business pulled together three advisers who all said the same thing. The buyers’ standards have shifted. James Frank at Frank Law, Jaime Almond at Hatcher Advisory, and David Caruso at OnlineBusiness Market pointed to one pattern. Buyers now want clean financials they can verify themselves, low key-person risk, and businesses that run on systems rather than the founder’s sixty-hour week. Caruso put it plainly: “Buyers have stopped paying for stories. They want clean financials and revenue they can verify themselves, in a business that runs on systems rather than the founder’s sweat.” Frank summed it up: “The best sales are prepared years in advance.” Reserve Bank research backs the demand side up, showing profitable, medium-sized businesses are the most likely acquisition targets. The buyers are there. The question is whether your business is showing up the way they want it to.
What it looks like from the broker’s side
After more than 20 years at Finn Business Sales, with more than 600 businesses for sale across the network right now, our view is that every business is saleable in its current state. It doesn’t need to be perfect to go on the market. What we see from the broker side is what shifts a business from saleable to attractive:
- Financials that are clean and clearly show the owner’s direct benefits. Buyers want the real number, not the tax-return number, and they pay more for businesses where that line is obvious.
- Good people running the day to day operations. The less hands-on work the owner does, the easier it is to get a deal over the line.
- Profit on the bottom line. The more profit the business shows, the easier it is for buyers to get bank finance, and that’s often overlooked by sellers.
The difference shows up at settlement.
What this means if selling is on your radar
- The buyers are out there. The work that gets you in front of them starts well before you list.
- Get your financials clean enough that a buyer can verify them. That’s not the same as clean enough for the tax man.
- Make sure you’ve got enough staff running most of the operations and customer interactions day to day. It’s OK if you’re involved in the business most days, but a buyer will want to see it’s not all centred on you.
- Document the systems that run the business. They look boring in the early years and they look like gold during due diligence.
- A confidential pre-market process keeps the work quiet until it’s done. Staff, customers, and competitors don’t need to know yet.
Are you ready to put the work in 12 months early? And do you know what your business looks like to a buyer who’s never met you?
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