Getting the best price

What Buyers Like and Will Pay More For

 When buying a business, buyers and their representatives (agents,lawyers) create a short list of  a specific set of criteria. Among them are:

More Cash and Less Inventory
Positive Long-term Contracts
Diversified Base of Customers and Suppliers
Solid Capture and Retention of Order Data
An Audit for the Prior Five Years
A Strong Management Team

Not all may apply to your business but probably most do.
More Cash and Less Inventory
Buyers like to see a strong cash position. This comes from smart management of working capital. The seller can increase their cash position by:

Collecting  accounts receivables faster
Clearing inventory that is not moving
Obtaining the most favourable terms for payment from  suppliers

Positive Long-Term Contracts
Long term contracts reduce volatility and uncertainty.Buyers will focus on confirming the sustainability of production. Long-term contracts examples are

long-term supply contracts
leases on valuable land and buildings
leases on production facilities and distribution.

Diversified Base of Customers and Suppliers
The seller should not be dependent on major customers for a large portion of their sales because customers can put pressure and threaten to withdraw their business.

The opportunity to supply a major retailer (i.e. Wal-Mart […]

How to Obtain a High Sales Price for Your Business

A business should do more than provide the owner with a livelihood. In addition to fulfilling the owner’s passion it needs to achieve such value that the owner can sell it at exit time for a price that reflects the time and effort invested. After putting in 20, 30 or 40 years the business should be sold for enough to provide a comfortable retirement for the exiting owner. If not, then all the business did was to provide the owner with a job. Building a business should factor in an exit plan and converting into cash the value built up over the years.

At exit time because of age, lifestyle changes, and financial needs, business owners want to realize the value locked up in their business. Too often the offers they receive do not meet their expectations. This is a situation that could have been avoided.

The investment made in building a business over a generation is frequently several million dollars, and too often it cannot be sold quickly. So, to arrange for a quick sale, and to obtain a fair price much preparation should have […]