Business Valuations for Buyers
What to look for in a seller
Business owners decide to sell their businesses for a number of various reasons. It is important that individuals, companies or investors seeking to acquire a company conduct diligent investigations into the business entity, the existing owner, and that owner's history in operating the business.
Positive Characteristics of a Seller
- Well organized and orderly information (financials, executive summaries, collateral, etc)
- Optimistic and realistic about the future of the business
- Realistic asking price and terms
- Willing to offer seller financing
- Open in assessing wins and losses for the business
- Proactively identifies any key areas of weakness or concern about the business
- Willing to stay on after purchase for transition and new owner support
- Long-term relationships with loyal employees and clients
Negative Characteristics of a Seller
- Exorbitant asking price
- Absence of a professional business appraisal
- Absence of a professional business broker/advisor
- Demands cash upfront payments; offers little or no seller financing
- Not willing to be much help after the acquisition
- Selling the business because of significant, negative trends in business and/or industry
- Pending lawsuits
- High turnover rate with employees, clients, partners, and/or vendors
- Poor reputation on the Internet, BBB, or excessive customer complaints
While financial performance is the primary component analyzed by a savvy business buyer, it is critical that may other factors be examined and considered when buying a business. Due diligence and going the extra mile can be the difference between buying a winner versus buying a lemon.
To learn more about business owners and their intentions to sell a business, please contact us today or call us at 877-VALU-BIZ.