Buyers of most “Main Street” businesses are buying the business to replace/provide an income. Which means the first thing they are looking for is enough verifiable income to service the debt for the loan they took out to buy the business and leave enough to live on. They also want to see an upward trend or a path to trend up.
Record keeping needs to be excellent not just to gain the buyer’s trust but to make it through the loan approval process. Banks won’t lend on anything less than verifiable income, real estate and maybe 20-50% of value for hard assets depending on industry.
Another top want is a business that can run without the existing owner.
The more your business can run without you the more value it has to a buyer and the broader appeal it has when you are selling. Will the buyer be confident that they can step in and the business won’t miss a beat.
Will employees, clients and vendors transfer with the business?
In summary, buyers are buying hard assets, a multiple of cash flow and serious opportunity. They are not likely to pay much for the blue sky value many business owners see in their business.
We provide free consultations to help you develop a plan to exit your business and prepare it for a sale the will provide the return you deserve.
Richard Roberts, ABI is the Senior Managing Broker at AEGIS Business Brokers, LLC and an Accredited Business Intermediary and maintains an Arkansas Commercial Real Estate License.
He also maintains memberships in the International Business Brokers Association, Chambers of Commerce, Committees and Volunteer Organizations. Contact Richard at 479.689.4455 Ext 11 or firstname.lastname@example.org.