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How to Make Your Business Attractive for Acquisition

It pays to have an exit plan for your business. Although you’ll want to stay with the enterprise as long as possible, it’s crucial to have a way out when you need to move on to greener pastures. If you want to sell your business eventually, you’ll need to make the right choices right now.

Businesses that sell fast have several factors in common. They must meet the requirement of having growth potential to draw in acquisition interest. The people who take over are going to want to scale up to get a return on their capital, so they need to see an established growth engine that can benefit from more funding.

Business acquisition meeting

Investors have to be able to get a return so they can’t mess around with acquiring companies that don’t offer a ton of upside. Show them sales and growing revenues, and they’ll want in fast.

Profitability Is Always a Key Metric

Buyers will reckon that you have a profitable enterprise on your hands. They’ll want to know that they can earn a positive return once they ante up. There’s very little reason for outside money to enter a company that barely turns out a profit. There won’t be enough money for the investors to carve up between themselves. They’re managing risk, so they’re looking for healthy balance sheets and growing profitability.

Buyers also look into trends, so it’s not always enough to temporarily gin up your numbers. They’ll want to see consistent numbers going back as far as possible. From an investor’s perspective, they need to ensure they’re not overpaying. If they plunk down too much cash for too little in return, they’ll never catch up and cash out.

When buyers speak to a local business broker, they are looking for one thing. They want to invest in profitable companies that are growing and can use a quick boost from enhanced capitalization. Obviously, you want to hire the best in your region; for example, if your business HQ is in Melbourne, Australia, it’s imperative that you should hire Melbourne’s best business broker,

Examine the Downside

You may as well have a complete picture of the financial health of the enterprise before you attempt to sell. Buyers are going to pour over records looking for conflicting financial information. All debts incurred by the business will impact the sales price and so will any pending liens or tax penalties. Sometimes business owners are looking to escape from their organizations before something terrible happens.

Those types of events keep acquirers awake at night. If you’re able to assure the interested parties that there is no surprise, it will increase the likelihood of a speedy sale.

Improved Efficiency Is a Magnet for Buyers

When you max out the capabilities of a small business, it may be time to sell out to a larger rival. Bigger companies are always buying smaller brands when those firms are hitting the wall. It could be the perfect time to get out and leave the heavy lifting to a firm with more scale.

When you wait until the firm is financially stable and has a strong growth record, you’ll attract the types of buyers you desire. That’s why it may be worthwhile pushing efficiency initiatives up until the time you sell out. The extra effort will result in a higher asking price.

Business speaker giving presentation

photo credit: Decoded_conf / Flickr

Tell a Story Worth Hearing

Corporate stories are all the rage, and your business will sell better with a clear narrative in place. Stories help tell the tale to customers, and marketing departments need tales to increase sales. If your enterprise is well-loved by clients who understand brand messaging, you’re more likely to receive attractive acquisition offers. The same types of messages that work for attractive new sales will help bring in buyer eyeballs. Branding is what helps revenues grow so make sure your company knows its position.

There’s no valid reason to focus energy on selling the company. It’s always worth focusing on the activities that bring business success. Those metrics show up in the numbers and are what buyers care about most ultimately. The potential acquirer has its team and strengths, so they will make their buying decision based on what value they believe they’ll add after taking over.

Some of the metrics that matter most to them will be meaningless to your objectives, so focusing on classics like revenues, profits, and customer satisfaction are always in style.

Customer Relations Matter

The relationship your company has with customers is probably the most crucial element for a buyer. They’re looking to take your customers to make them theirs. They’ll want to do that smoothly and with a minimum turnover to make the transition as smooth as possible. If they think they’ll be able to maintain a majority of clients, they’ll enter the deal quickly. Face it, companies either grow by acquiring new clientele or picking them up through marketing. Acquiring your company will make their jobs extremely easy, especially when the customers are happy.

You’ll want to offer a smooth transition to the new team. The new company will want your customers, vendors, and employees to go along with the takeover with no surprises. That means you’ll need to keep these interested parties in the loops when the negotiations reach a specific point.

Mergers and acquisitions negotiation

Find the Best Partner

You may want to be patient when you begin taking offers. Not every company will be a fit, especially if there’s a clash of corporate cultures. Naturally, if you plan on staying around after the acquisition, this factor takes on even greater importance. Selling a company is a scary proposition, but there are numerous benefits.

The chance for growth and new opportunities will top the list of excellent reasons to venture forward. If you’re tired of the day to day work and want more capitalization and new challenges, explore the idea of selling.

Takeaway

The acquisition market remains hot, so it’s a fantastic time to sell. With a strategy in place, your team should have no problem finding the type of buyer that will make an attractive deal. You hold the cards so demand the best when it comes to negotiations. You earned a substantial payout and now’s the time to get yours.

About author

Robert Keith
Robert Keith 2 posts

Robert Keith is a freelance writer and thought leader in the space of business growth, entrepreneurship and marketing.

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