Four Traits of Businesses Sold Successfully

2misi.com

http://www.2misi.com/article/2012/06/four-traits-of-businesses-sold-successfully/

There seems to be a light at the end of the tunnel for business sellers during this economic recovery period. Companies should prepare to sell with the presumption that the economy will continue to improve. With that in mind, there are four considerations to be aware of while preparing your company for the big sell. The more of them that apply to a business for sale scenario, the more luck the owner is bound to have in achieving a quick and successful transaction. 

Pattern of Profitability - Anyone looking to purchase a business wants to feel confident in the ability to continue making money. If business sellers don't make their companies' potential for profitability crystal clear, they'll likely have a hard time keeping potential buyers interested long enough to get a deal off the ground. For this reason, any seller with evidence of steady, reliable cash flow and revenues has an automatic leg up.

That could mean the difference between selling and not selling in today's volatile market. If buyers can see that a business has managed to maintain its profitability during these tough times, they'll know that there's stronger potential for when the market improves and that there is less risk in moving forward with a transaction.

Where are We Going? - Not only is it important for business sellers to show potential buyers that they've maintained profitability during difficult economic times, but also to provide evidence that the business has the potential to grow and thrive down the line. Sellers who can offer buyers a focused growth plan - which might detail strategies such as acquiring competitors or expanding to a complementary product or service - are having an easier time closing deals.

Seller Financing - There continues to be a lot of emphasis placed on a business seller's willingness to finance at least part of any business for sale deal, and for good reason. Transactions that require buyers to come up with the entire purchase price of a business simply don't close. Not only have buyers faced major drops in savings and retirement accounts as a result of stock market declines, they've also been hit with increasingly limited access to backed commercial loans. As a result, the sellers that are willing to finance part of the sale price and allow buyers to pay them back with interest later are having the greatest level of success.

Physical Assets for Debt Financing - It's no secret that banks are more cautious than ever before about lending. As a result, businesses with greater amounts of tangible assets - such as cash, durable equipment or owned real estate - are having much more success securing purchase loans.

While we expect the small business market to slowly improve, for now business owners considering going to market should think carefully about whether their businesses are fit to sell during these uncertain times. If they're not, owners would be wise to take steps to make their companies more marketable before going ahead with a plan to sell. If the business can appeal to buyers with these attributes, though, sellers can have great success overcoming current economic roadblocks.