Finding an external buyer that will not only meet your financial objectives but also take care of your legacy, employees, customers, and suppliers is not easy. By defining your financial and non-financial objectives right at the outset, you increase your chances of finding the right buyer. Without them, you risk attracting buyers who will likely undervalue your business and not share your vision for its future.
When you make the decision to sell, the objectives above help you find the right buyer. However, it is also important to understand what buyers look for when considering a potential acquisition. So, to help you increase your chances of finding the proper investor for your business, we’ve listed some of the key factors that can either increase or decrease the value of your business – along with potential transition risks that can make your business less saleable.
When thinking of boosting the value of your business, consider the following questions:
If you’ve answered “no” to most, or even some, of these questions, then you may need to make some changes to boost the value of your business.
You should also watch out for possible value detractors that can make potential investors look the other way. Here are some of the questions worth asking about your business:
If your answer is “yes” to some of these, then consider revising your business to optimize its value.
The points noted above address one of the most important topics when it comes to the sale of your business — valuation. However, it’s worth noting that other related factors are just as important.
For instance, if you, as the owner, are responsible for the majority of management duties, then your departure can leave the company without proper management. You don’t want issues like that to come up because buyers will likely want to be compensated for them, or they may even refuse to purchase your business in the first place.
Here are some questions that you may want to ask yourself:
If you’ve answered “yes” to all of these, then your chances of having a risk-free transition are very high. However, just to be certain, be sure to connect with a third party to review vital accounting policies and conduct more testing on your risk areas. You should also get your tax advisor to evaluate the potential transaction and make sure it’s as tax-efficient as possible.
Perseus Group, an operating group of Constellation Software Inc., acquires independently managed software companies around the world. We provide them with the strategic guidance and the financial security that they need to become leaders within their respective markets. We prefer to treat our acquisitions like people, not property. That is why we ensure their growth and development through a fostered culture of sharing best practices. Contact our team to learn more.
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