You acquire companies because you want to diversify your portfolio, and grow the brands you currently hold…
You’re constantly in contact with brokers who present opportunities to you, asking if you would like to invest.
The first thing you would want to know is this:
Does the business make money?
Do sales grow?
Do profits grow?
Is there a growth opportunity in their market?
If the answer was NO to all of the above, then you would move on to the next business.
This makes sense right?
When it comes to planning your business exit, this is a significant consideration.
Nobody will buy a business that is not profitable or growing, so your FIRST priority as a business owner should be to ensure that your sales & profits look healthy.
Think about it…
On the BSale website (as of today) there are 14,708 businesses for sale.
Investors have the choice when it comes to buying businesses.
You want to ensure yours looks attractive and is presented well, but more importantly, is a good investment for the buyer.
Here’s a few things to keep in mind:
> Ensure your sales & profit growth are consistent & sustainable. No crazy fluctuations, as this is seen as a red flag.
>Make sure your sales will continue to grow without you – the business owner. Setup a sales system that works without you BEFORE you go to market.
>Speak with your accountant well before you want to sell. They can assist to make your financial statements presentable to a buyer.
>You generally want between 3-5 years worth of sales history before an investor will look at your business.
So put yourself into your ideal investors shoes, and think about how attractive your business is right now.
Do you need to grow sales for a few more years?…
Or perhaps make some expense reductions to increase your profits?…
By starting NOW, you’re more likely to attract better buyer attention when you’re looking to exit.
Found this helpful?…
Great. Please share it with others you think might benefit from it.
Need help with preparing your Exit Strategy?
Then join our ExitWise Community – and receive a monthly email packed with helpful advice and guidance on how to prepare your business to exit successfully.
