Buying or selling a business is one of the most important decisions that most people ever make. Let’s take a moment to examine some key points involved in buying or selling a business.
Factor #1 – What are You Selling?
What is for sale? What is not included with the buyer’s investment? Does the sale price include any real estate? Are vital assets, such as machinery, included in the sale price?
Factor # 2 – What are the Range of Assets?
What is proprietary? Are there formulations, patents and software involved? These types of assets are often the core of the business and will be essential for its long-term success.
Factor # 3 – Evaluating Assets for Profitability
If assets are not earning money or are too expensive to maintain, then they should probably be sold. Determining which assets are a “drag” on a business’s bottom line takes due diligence but it is an important step.
Factor # 4 – Determining Competitive Advantage
What gives a business a competitive advantage? Buyers should understand where a business’s competitive advantage lies and how they can best exploit that advantage moving forward.
Factor # 5 – How Can the Business Be Grown?
Both buyers and sellers alike should strive to determine how a business can be grown. Sellers should be prepared to provide prospective buyers with ideas and potential strategies.
Factor # 6 – Management Depth
Businesses are only as good as their people. It is important to ask just how deep your management team is, how experienced that team is and what you can expect from that team.
Due diligence, asking the right questions and patience are all key in making your business a more attractive asset to buyers or for finding the right business for you.