What are buyers interested in?

Generally buyers (except in certain exotic situations) are looking for two things:

  1. Return on investments (ROI)
  2. A going concern

A 5% ROI is probably justifiable for municipal bonds. Investors in private equity, however, are looking for much higher returns. Think what your selling price should be in order to provide 30-50% ROI.

A ”going concern” is a fancy term for the company’s ability to continue profitable operations in the future. Sure, investors worry what will happen to the company after you walk out the door. Will it run smoothly or collapse soon after?

Those two variables are mutually dependable. Proving that your company can be operated by another person, takes off a lot of pressure on the ROI side. Buyers are more willing to pay for something that will work for a long time. A high ROI is just compensation for the risk of the business going belly-up in a year or two.

A conscious buyer looks at the quality of the reporting system first. Is the accounting done in-house or outsourced? Is it current or is only last quarter is available? What reports does the owner review regularly? And so on…

The business website is also important. The company website is the tool of first impression. If the buyer is not impressed, the company’s clientele probably is not either.

The smart buyer looks at financial ratios. A seller’s gross margin is higher than the industry average helps the buyer reduce the discount rate, i.e. the ROI requirement. Suppressing the discount rate by 5% can leave tens of thousands of dollars in your pocket.

Florida Buy and Sell helps to build a state-of-the-art accounting and online marketing system that will make your company appealing in any investor’s eyes while boosting its market capitalization. Call us for a free preliminary evaluation of your business at +1 (305) 509-6547.

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