3 Ways to Make Your Business More Buyer Attractive
#1 – Make Yourself Replaceable
One of the first questions a Buyer asks is, “Can I be you?” It’s nice to feel like you’re irreplaceable, up until the moment you’re trying to find someone to replace you. Your job is to help them fill your shoes – quickly.
Start jotting down your Standard Operating Procedures (SOPs). What do you do every Monday morning? What do you do every Friday afternoon? QuickBooks Reports, Production Schedules, Bullet Point Memos, Check Lists – anything that memorializes your knowledge – earns you Goodwill value. It doesn’t have to be perfect – just helpful to the next owner. Remember, “transferrable” is “sellable” – and if you can’t sell it, what good is it?
Another part of this is selfish – how many panicked 11:00 PM phone calls do you want, asking, “How do I [insert random important task here]?!” The better you equip the Buyer, the easier it is to make a clean split.
#2 – Make Your Financials Understandable
The second thing a Buyer will do is pop open the books. It might feel intrusive, so take a moment to review your historical performance and anticipate: A) what they are looking for, and B) how you can answer the questions – before they are asked. Control the narrative!
Are there large amounts of “Miscellaneous” or “Other” expenses, that could be re-classified into appropriate categories? Are there large discrepancies year-to-year that need explanation? Are the repeat expenses falling into the same bucket every time they are entered? Are there any non-reoccurring expenses that will be asked about?
Footnoting the question marks with answers will give the Buyer confidence that everything is accurate and that they know what they’re buying. Remember – time kills all deals. If a Buyer must spend weeks of research to find the answers they are looking for, it slows momentum. Remove the roadblocks!
#3 – Make Your Relationships Contractual
Don’t leave the “sideline negotiations” to your Buyer – put your relationships in writing beforehand. Make sure your lease is long-term and assignable; approach key vendors and repeat customers for written contracts, when applicable; get key employee buy-in, if possible. Keep control of the sale by ensuring all negotiations go through you.
Lastly, make sure your Transition Team includes an accountant, an attorney, and a business broker who have experience in mergers & acquisitions. Take the time to interview several professionals from each category; find people you work well with and trust.