Are you looking for a way to perfect your presentation? Understanding what a serious buyer wants will help you prepare your business for sale.
By considering five relevant areas in which a potential buyer will have questions, this post will help you understand how to tailor your presentation to make your business even more attractive to a serious buyer. Taking these points into account will also help you save time as you present your business to potential buyers, answering their questions before they are asked.
- Interest in the Industry
First, a serious prospective buyer will want to have a better understanding of your industry—including your existing customers, prospective customers, and your business’ strengths and weaknesses. Key factors, such as threats from competition, will also be of major interest to prospective buyers.
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Expect a buyer to take a long look at discretionary costs. Sellers will often attempt to reduce their expenses in a range of discretionary areas including advertising, research and development, and public relations. This is done to help make a business appear more attractive to a buyer. However, it is important to note, a savvy prospective buyer will notice reduction in discretionary expenses.
- Inquiries about Wages and Salaries
Wages and salaries is another area that buyers zone in on, and that your presentation should address. If your business is paying minimum wage or offers a limited retirement programme, then employee turnover is likely to be high. A buyer may be concerned that employee stability may be low, which, of course, can potentially disrupt business.
- Questions about Cash Flow and Inventory
No serious buyer will ignore the issue of cash flow. Any prospective buyer will want to know that the business he or she is considering buying will continue to generate profits both now and in the future.
Inventory is another area that will not be ignored. If your business is carrying a large amount of antiquated, unsalable inventory, or unusable inventory, then expect that to be factored into a prospective buyer’s decision-making process. It is best to disclose such inventory in your presentation instead of hiding it, as it will be discovered during due diligence.
- Seeking Capital Expenditure Details
Finally, a prospective buyer will examine capital expenditures. You can expect the buyer to carefully evaluate machinery and equipment to ensure that there will be no expensive surprises looming on the horizon.
The five areas highlighted above are not the only areas that a buyer will explore and investigate. Everything from financial agreements and environmental concerns to government control will be examined in depth. You should invest some time thinking about the situation from the perspective of a buyer, as this will help you discover many potential problems and try to secure viable workarounds. Working closely with an experienced merger and acquisition advisor is another way to ensure you can successfully anticipate a buyer’s needs and present your business in a positive, professional light.
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