Preparing to Sell Your Business - Traits of a Highly Marketable Business

Preparing to Sell Your Business

In preparing to sell your business you should ask yourself “HOW MARKETABLE IS MY BUSINESS?

                                                                                                            

Traits of a Marketable Business are:                                                                                                                                                                             

Increasing Revenue                                                                                                                  

Business buyers today look for operations with Revenue Increases of at least 5% per year for the past 3 years.

Complete Documentation of Financials                                                 

Buyers want provable cash flows.  A truly marketable business will be capable of providing the following financial records for at least 3 years:

            a. Federal Tax Returns

            b. Income Statements

            c. Balance Sheets

            d. Excise Tax Returns

            e. Payroll Records

Continuity of Ownership                                                                                                          

Have you been the current owner for at least the last 3 years?

                                                          

Long Term/Favorable Lease                                                                                                    

Buyers look for businesses with leases of at least 5+ years remaining, with annual rental increases of about 3%.  Most buyers strongly prefer a gross revenue to rent ratio of no more than 6-8%.

Pricing                                                                                                                         

With the growing sophistication of buyers, the pricing of a business for sale is the single most important factor in determining whether it sells, and how quickly it sells.  Regardless of how well positioned a business may be relative to the other factors mentioned, an overpriced business will often remain on the market for a very long time, receiving minimal buyer attention.  A well priced business will receive a lot of attention as soon as it is listed, meaning many more possible buyers! 

Terms of Sale              

Other than pricing, the terms of sale are the next most critical component in determining the marketability of a business.  Every business is made more marketable if some amount of seller financing is offered.  For businesses that are unable to produce complete documentation of financial records, sellers should expect to finance 50% to 70% of the sale. 

Conditions of Premises                                                                        

The condition and appearance of the operation is extremely important, especially if the business deals directly with the public.  A neglected facility is a frequent reason for interested buyers not making an offer, or making offers significantly lower than the asking price.

Existing Management and Personnel                                                                 

Having good people in place is very important.  Poor morale and inattentive workers are negative factors that jeopardize deals.  If your business is not very dependent on you, the marketability and value of it increases.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com