Have you ever wondered why some business owners are approached regularly with offers to buy their businesses? Then there are other business owners who never receive offers from people wanting to purchase them. Why is this? Let me take a minute and tell you why I want to buy your business and let’s see if you can see your company through my eyes.
Your Company is Profitable
I want to buy your business because it is profitable. Sure your company took a hit during the Global Financial Crisis (GFC) AKA the Great Recession, everyone’s business did, but when sales dropped you kept your head above water by closely managing your expenses. Since 2012 your profits have increased both in total dollars and as a percentage of sales. I want a profitable company that can adapt to changing business cycles. That is one reason I want to buy your business.
The Long Term
I want to buy your business because I believe it will continue to prosper over the long term. Investors want to buy businesses when industry fundamentals are strong, revenues have grown consistently (say for the past 3-4 years) product costs are under control, gross margins are healthy and have, perhaps, edged up a bit since the GFC ended and your selling, general and administrative expenses have been relatively constant for the last few years. I want to buy your business because you have not milked the company for cash, but instead have strategically balanced reinvestment in the business with the level of income you produce.
Solid Financial Statements
I want to buy your business because you have solid financial statements. While the financial records for some companies look like a tornado touched down in the middle of them, you have had a CPA audit and sign off on your financial statements.
On your balance sheet, assets reflect the true value of your assets meaning inventory is fairly valued, receivables are collectable and your longer term assets, like plant and equipment, are in good shape. I had a boss once that said, “At work all our sins can be found in inventory.” It is clear that you have eliminated most of your sins.
I want to buy your company because you have many customers across the country buying your products and no one customer represents more than 20% of your annual sales. While I would prefer to see 10%, you have worked hard to diversify your customer risk and it shows.
Furthermore, I want to buy your company because you have multiple suppliers to support your manufacturing to ensure consistent delivery and competitive costs. In addition, while you do not have the most sophisticated systems, the systems you have in place are reliable and have been documented.
I want to buy your business because when I looked under the hood and reviewed your legal documents, I found that your trademarks, patents, leases, contracts, distribution agreements, employment records, insurance and all other legal documents were buttoned up with no loose ends and that you do not have any pending lawsuits.
I want to buy your company because it is profitable, you have managed the business for the long term, your financial statements are solid and you have worked hard to eliminate risks, where appropriate. Now the question you need to ask yourself is, “Is this my business?”