What Do Buyers Look for When Analysing Companies for Sale?

When trying to sell something, it’s important to look into what your potential buyers are looking for. Whether a company or a car, the same principles apply – if you know what people want, you can both optimise that element of what you’re selling and make sure that it plays a prominent role in your overall marketing strategy. If you’re looking to sell your company, then read on to find out what buyers typically look for when analysing companies for sale.

How the Company is Performing Financially

One of the main things that potential buyers will want to know about any company for sale is how healthy is it financially. Depending on what stage of the sale you’re at, they’ll want to see a wide range of financial records, including tax returns and cash flow statements. In addition to the obvious necessity of showing your financial history, buyers will often feel more confident about the purchase if everything is out in the open.

Market position

The success of a business is partly determined by its position in the market. The combination of its brand name, competitive advantage, customer base, and many other details can make or break its ability to turn a profit. As a result, you’ll want to have a large amount of data surrounding your business’s market position compiled and ready to show to any prospective buyers. 

Potential for growth

In most cases, people or organisations looking to buy a business will want to grow it beyond its current size. They’ll want to be shown that your company is easily scalable and that there’s a stable desire among consumers for your product or service. If you can show that the business has room for growth, you can likely demand a higher asking price and attract a far wider range of buyers.

Efficiency

While buyers will obviously be able to factor in potential improvements, you want to be able to illustrate that your company is operationally efficient. Efficiency and effective management across the board is a great way of showing that your business is run in a responsible manner, increasing the probability that it’ll be a promising investment.

IP and material assets

Depending on the nature of your business, you may want to be able to show that you have valuable assets, whether that’s unique intellectual property or a portfolio of material assets. Whatever they are, these assets can significantly increase the value of your business, providing further confidence to potential buyers that what they’re getting is worth the cost.

Regulatory compliance

Finally, buyers want to be confident that the company they’re buying is not a potential can of worms from a legal perspective. You need to be able to illustrate a high level of regulatory compliance – how you go about doing this will depend on the niche that your business operates in. Getting all of this information ready and presentable well before it’s necessary can minimise any disruptions and avoid unnecessarily scaring away promising buyers.

While this is a reasonably comprehensive list, what a buyer looks for will differ from case to case depending on the nature of your company. It’s important that you seek assistance from a professional broker such as Dexterity Partners, to ensure that you’re leveraging everything at your disposal to get the best price possible.


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