Characteristics of a Successful Business – M&A Transactions

Posted by hgsba on August 17, 2018

Various organisations fall short of their potential valuation or maximum sale price. When there is no such thing as a perfect business without flaws or challenges, the businesses which sell near the top of the worth range or command the highest multiple embody a number of common characteristics. fusionex

1. Increasing revenue/profits. Dollars is the fuel of business. Businesses which may have strong financials with year over year growth in earnings and profits will maintain demand and should achieve a nice-looking valuation.

2. Tidy Books. Having accurate, complete, up-to-date and professionally ready financial statements and information is one of the most critical components to a successful business sales. 

3. Bright prospects for future. Businesses that operate in an industry that has a strong perspective for continued growth in the years ahead will be highly sought after.

4. No customer attention. A company that has a diverse and broad customer base will have a lesser risk that the damage of anyone customer will have a material impact on the earnings and profits of the company.

5. Multiple vendors. Companies with a diversified product and service offering with a deep bench of suppliers and partners would have been a less risky acquisition when compared to a company who is dependent on merely one manufacturer or service agency to build income.

6. Secure employees. Having a dedicated and content work power with permanent employees is always a positive feature for a buyer seeking to get a secretly held business.

7. Founded Processes. A business that has written procedures outlining work flow and detailed processes provides greater continuity within a business transfer of ownership.

8. Owner not the business enterprise. Companies where the owner lends their knowledge by working “on” the business vs. “in” the business are less likely to experience a reduction of earnings throughout a deal. Owners who have end up being the face of the business where they can be one of the chief factors behind customers using their products or services create challenges for the new owner in keeping these loyal clients.

dokuz. Business qualifies for purchase funding. A business for sale that meets the qualifications for acquisition financing by a bank or SBA backed lender will benefit from their capacity to be marketed to a wider audience. Selected issues prevent 3rd get together financing from being secure including poor financial performance or messy books with unreported cash and sketchy add-backs.

10. Professional Consultants. Successful business sales require a team of professional advisors who are experts in their designated field. Members should include an experienced M&A advisor or business broker, a business legal professional who specializes in transactions, and a CERTIFIED PUBLIC ACCOUNTANT (CPA) familiar with tax structuring and asset allocation. Experienced experts are worth their weight in gold and will add value that much exceeds the fees included.

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