Buyers in 2019 are very particular about the information they want to review when purchasing a business. They are very particular when looking for the exact fit to suit their business and personal needs. They want everything regarding the business to be as perfect as possible. Below is a list of things that they will want to review before moving forward with a Purchase and Sale agreement on your business.

It is to your advantage to have your business clean, picked-up, and attractive when buyers walk through your doors. If you have items that need to be repaired, fixed, or modernized, make sure those issues have been addressed before buyers arrive at your business. I have had sellers with broken or poorly working windows and doors that they never thought to repair because it’s been like that for a long time. Things in ill repair will place doubts in a buyer’s mind. They automatically think, “What else is wrong with this business”?

Buyers do not want to see a sudden drop in sales right before you present your business for sale. Don’t discontinue a product or service right before you plan on selling your business. Buyers want to see solid growth not a dip in the financials. If you have cash sales, you must be able to show the sales if you’re counting it towards your cash flow. Buyers are not going to pay for what you can’t see. Make sure all your records are tight and easy to convey.

If you don’t own the property, the lease is the single most important item of value to your business. You will need a solid lease that is renewable and assignable. I have seen too many owners try to sell their business with no lease (between leases) or little time left on their lease. Without being able demonstrate continued possession a buyer will not purchase your business. You need a strong, transferable lease in order for this not to happen to you.

Buyers also want to know how closely you’re tied to the business. If you leave, will the business retain the customer base? Buyers will want to know how many hours you work per week. It’s possible that they will want to self-manage or they may like the idea of retaining a manager/supervisor and other employees to run the business. A good staff is key to a solid business. The more hands free you are from your business, the more a buyer will be interested in purchasing from you. Buyers do NOT want to hear that you are the FACE of your business. That is one sure way to send buyers running for the hills.

Make sure your financials are up to date and easy for buyers to see your TRUE CASH FLOW. If you are stating that your business nets $250,000 make sure your P&L states that you actually netted $250,000 not $50,000. Buyers will want to see financials as soon as they preview your business. If they have to wait for financials they will assume something’s wrong with the business. If you do not have a Profit and loss statement, hire a bookkeeper or accountant to put one together for you. No one will purchase your business based on your good word. No one.

Here are what buyers want to see for financials:

  • 3 years Profit and Loss statements with balance sheets
  • 3 years Tax Returns
  • 1-2 years of Merchant Credit Card Processing statements
  • 1-2 years of Bank Statements
  • A current list of furniture fixtures and equipment
  • A copy of your current lease
  • A list of owner incentives and add backs

What buyers want to know:

  • Solid growth in the previous years before you are selling.
  • That you have owned the business for at least three (3) years.
  • Why are you selling your business?
  • Are you delegating your work to managers and employees?
  • How many hours are you working a week?
  • Do your tax returns match your P&L statements?
  • How easy will it be to step in and take over your business?
  • Do you have a long term lease and is it transferable?