What should interest buyers do when they approach business sales as a proposition? Is it important to close a deal early and avoid a bidding war, or is it wise to be diligent about the process and carefully review the details?
For many parties, they will see that the latter is the best mechanism to reach a positive outcome, even if that means they don’t end up with the business property. There are 7 key ways that parties can safeguard their own position as they take note of these sales opportunities.
From the earliest of stages with business sales, buyers should be paying attention to the perception of the brand from the wider community and consider how consumers have been engaging with the outlet. This is the type of research that takes into account qualitative and quantitative data, shaping where operators place the brand in the context of the wider industry and what kind of changes that have to be made on day one. How much competition is there for the product or service and is the business something that people respond well to?
Dealing with business sales is a tricky and complicated exercise at the best of times. Even when the buyer and seller are on good terms with one another, it is clear that there are provisions and contract terms that have to be carefully analysed for the sake of all parties involved. To avoid any litigation, liability or financial issues down the line, have a lawyer read over the contract terms and have valuation experts look at the objective facts that influence how the contract should be constructed.
What is a key factor that determines how a figure is derived with business sales? In many circumstances, it will be the interest of other prospective buyers that persuades participants on either side to either increase, decrease or stick firm with a figure. This threshold determines who holds the leverage and informs buyers about what they are up against.
The sales of these established commercial enterprises is always improved when buyers have clear goals in mind that they are establishing for short and long-term targets. Do they want to franchise the brand? Is it a means of expansion? Is it to have something to pass onto the next generation? Is it a tax write-off? Crafting clear objectives ensures that all parties are on the same page about what they want from the project.
Business sales are in safe hands when practitioners have done their research on the company financials and know what they are dealing with from a bottom line perspective. The cash flow statement, income statement, profit and loss statement and balance sheet are all components that need to be involved in this analysis. It outlines how much the business is turning over on an annual basis, how profitable it happens to be and if there is any debt leveraged against the brand.
Why is an individual or group looking at proceeding with business sales and deciding to put the company on the open market? Is this something that indicates a lack of success and long-term issues that have forced their hand, or is it merely a case of personal circumstance and wishing to start a new chapter? Don’t hesitate to ask the question.
People will only have so much patience with potential business sales. Ultimately they need to establish clear timelines, from the review of the contract and the negotiation to lodging an offer and making a firm decision. This is especially the case when buyers have to consult with lenders to finance the project.
Paul is an content marketing strategist and serial entrepreneur.