Selling Your Business: What Makes A Business Valuable

For most buyers, their highest priority is getting a return on their investment. Positive cash flow helps ensure that happens, which is why it’s typically the primary factor buyers consider when looking at businesses for sale. If you have clean financials and can demonstrate positive cash flow, you’ll be more likely to sell your business for top dollar.

Assets also play a major role in valuing a business. From intellectual property to inventory, equipment to real estate, the dollar value of your assets will be a major consideration in the asking price for your business.

Many buyers are attracted to favorable terms and more likely to pay top dollar if they can get those terms. For each buyer, the desired terms will be different. Many will want (or need) owner financing. Others might ask for the payment to be split over time. Some would prefer that you and/or key employees stay on, in some capacity, to ensure a smooth transition. Before we start to market your business, we’ll determine what terms you’re prepared to offer to potential buyers. Once we have a qualified buyer for your business, we’ll continue to negotiate those terms – always looking out for your best interests.

If you have an impressive client base, particularly customers or clients who are active, loyal, and order frequently, you’re sitting on a gold mine.

Favorable long term contracts with customers and clients, vendors and suppliers, employees and contractors, and landlords can make your business even more valuable. In buying a business, new owners will face a lot of uncertainty. Solid contracts help ensure continuity and provide peace of mind.

Most potential business owners want to step in and run a “well-oiled machine,” and not have to set up operations from scratch, fix chaos, or invent new processes. The more efficient your operations, the more money you’ll get when you sell your business.

A strong management team – that’s in place and will remain after the sale of the business – can add incredible value to a business. Key employees can not only train the new owner, but can also potentially prevent a mass exodus of customers and clients.

Upside potential can be hard to quantify when selling a business, but if your business is steadily growing, your industry is expanding, or market trends make it likely that you’ll make more money in the future, these factors and others can be very appealing to potential buyers.

If your business could be run by an absentee owner, it will be even more valuable. Some buyers would like to invest in a business, but not necessarily run it. If it’s possible to run your business with little oversight, you’ll attract buyers who would prefer to be absentee, or semi-absentee, owners.