Did you know that many businesses listed for sale don't actually make it to the finish line? That's a lot of owners hoping to cash in who end up with nothing but frustration. After 40 years in the game, Transworld Business Advisors of Wyoming has seen it all and picked up some solid tips on what makes a business sell—and what doesn’t. Here’s how you can avoid ending up on the list of those that didn’t sell.
Stand Out with a Competitive Price
Pricing high to “test the market”? That rarely works. Small businesses usually sell for 2-3 times Seller’s Discretionary Earnings, and middle-market companies for around 4 times EBITDA. The sooner you’re competitively priced, the sooner serious buyers will notice.
Have Clean Financial Records
Buyers love clear financials. Accurate tax returns that include all revenue and only business-related expenses make financing easier and reassure buyers. Sloppy books? That’s a deal-breaker for many.
Show Positive Financial Trends
Revenue on the rise? Great! Buyers love growth and stability. If revenue is declining, be prepared to address it honestly, because buyers will assume there’s a problem.
Offer Seller Financing
Offering financing? You’ll catch more buyers. It’s a show of confidence, and it helps those who might struggle to secure third-party financing.
Include Valuable Assets
Well-maintained equipment and significant leasehold improvements add appeal. But remember, the resale value will likely be less than your original investment.
Ensure the Business Can Run Without You
Buyers want a business that’s not overly dependent on the current owner. A business that runs smoothly with existing staff is far more appealing than one tied to you.
Retain Key Employees
Buyers often look at key employees as crucial assets. To maintain morale, consider the timing and confidentiality of letting employees know about the sale.
Minimize Family Involvement
If family members are integral to the business, buyers might worry about replacing them or their influence on operations. A business without family ties is a cleaner deal.
Highlight Recurring Revenue
Recurring revenue from loyal customers or contracts is a huge selling point. It’s more predictable and valuable than “one-off” projects.
Secure Favorable Lease Terms
A reasonable lease is crucial. Buyers will need landlord approval, and high rent or inflexible terms can kill a deal faster than you’d think.
Keep Customer Concentration Low
Buyers don’t want all your revenue reliant on a single client. When one customer dominates your income, the risk for buyers is high.
Strengthen Your Brand
Positive brand awareness with solid digital reviews can boost your value. Buyers pay attention to what people are saying online.
Provide a Legitimate Reason for Selling
Buyers will always ask, “Why are you selling?” Be upfront. If they sense you’re hiding something, they’re likely to walk away.
Consider Enlisting a Business Broker
A Transworld Business Advisor can guide you through valuations, find qualified buyers, help negotiate, and steer you to closing. It’s a lot to handle alone, and a good broker increases your chances of a sale.
And, Yes… Be Price Competitive
Did we mention price? It’s worth repeating. Buyers are smart and will compare your price to others. Businesses priced too high just don’t sell.
Thinking about selling your business someday? Start planning now to check off these key steps, and you’ll be setting yourself up for a smoother, more successful sale when the time is right. Take our short Assessment Quiz to see how prepared your business is for the market. The quiz will give you insights into your business's readiness, showing if you're good to go or highlighting areas to work on so you don’t end up among the businesses that remain unsold.
