WHAT BUYERS SHOULD LOOK FOR 

Most potential buyers will have a lengthy checklist of the characteristics they’re seeking in any business acquisition. If you as the buyer have a good sense of what’s on that checklist, you’ll be way ahead of the game. Here are some things buyers prioritize:

 

  • Provable books & records — Buyers typically require verifiable sales and net income with supporting historical data, preferably prepared by the seller’s CPA.

  • Reasonable price and terms — Generally, prospective buyers won’t consider a business that is not priced competitively. 

  • Living wage — Prospective new owners want to know they can make a living wage from the business relative to the income and investment (after debt service). 

  • Return on investment — To be attractive to buyers, your business must offer a reasonable return on investment.

  • Seller financing — Buyers tend to favor transactions in which the seller offers at least some financing; it’s an indication that the seller has a vested interest in the new owner’s success.

  • SBA/3rd party financing — Buyers often prefer businesses that have been pre-approved for financing through banks and lending institutions.

  • Furniture, Fixtures, Equipment (FFE) — Virtually every buyer will insist on a complete list of all assets indicating that everything is in working condition. 

  • Lease — The lease is an integral component of many businesses. In most cases, potential new owners will require a new lease or assignment of the existing lease.

  • Training — New owners may not have hands-on familiarity with your business, industry and products, so if you’re prepared to provide training and support to ensure a smooth transition, that’s a big plus. 

  • Appearance — First impression is crucial, so the "seller's house” needs to be in order.

  • Covenant not to compete — New owners generally will demand a solid non-compete clause, with appropriate distances and times specified. This is a routine feature of many transactions. 

  • A good reason for sale — “Why are you selling?” That’s the first question you may hear from a prospective purchaser, who wants to see a logical reason for the sale. Your job: help that buyer understand your thinking. 

  • Disclosure — No last minute surprises. Both sellers and buyers are required to sign respective disclosure documents. 

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