Proforma Partners - Selling a Business - Buying a Business

Last month we considered the critical question every buyer needs to answer: will a business deliver financial performance in the future? In that same blog, we noted that high-quality financial reporting is critical to answering that question and attracting buyer attention.

The question also highlights that business sellers often focus on their past investments and how that history of hard work a sacrifice, should translate into the current value of the business, rather than explaining what buyers will pay more for: future earnings potential.

Company history is important. Inconsistent revenue and profit streams, bankruptcy, and major client or employee loss can be walk-away flags for many buyers. But assuming those hurdles are cleared, the next step to attracting high-quality buyers is to clarify your sell-ability drivers.

Taking this step pulls you out of the business history and into the future that a potential buyer is trying to understand. It also keeps you from confusing growing your business with growing a saleable business.

Essentially, your sell-ability drivers explain the future streams of profit in terms that a buyer relates to, along with opportunities to take your company to the next level.

Can your company operate in a couple other markets?
Could complimentary products or services cross-sell to existing customers?
Are there opportunities to expand your offerings to other cultures?

At a high-level, growth strategies generally fall in to market expansion, product expansion, diversification, and acquisition. It’s never too soon to think about which strategy holds potential for your business. The sooner you start the better you’ll be able to explain and demonstrate the strategy to future buyers.

Since 1987 Proforma Partners has been helping owners determine the best strategy to grow their business value. Contact your Certified Value Builder™ at Proforma Partners and begin improving the value of your company today.

Check out this video to learn more about Growth Potential and The Value Builder System: