Four Important Things a Buyer Wants to See When Purchasing a Business

1. Strong and Clean Financials 

Businesses do not sell without a clean financial history. During the sales process, a potential buyer will want to review the past three years of profit & loss statements, bank statements and tax returns. The buyer will be looking for not only accurateness in the records, but also encouraging trends. Key trends could include increase of sales, profits, or customers.

2.Independence from the Owner 

The less an owner has to do with whether or not revenue increases, the more the company is worth. Businesses that have a technical role, such as medicine or engineering, and rely upon an owner to do the work will have decreased value, because there are fewer people that will be able to replace that owner.

3.Systematic Processes Throughout the Business

The more processes and systems you document, the more potential it has to a buyer. An efficient business model incentivizes buyers to purchase the business.

4. Favorable Sales Trends

Buyers want to buy a business with upside, so a stable and/or positive trend for sales is a must. In addition, if a single client represents more than 20 percent of revenue, that can be a red flag as it puts sales at risk if that business is lost.