exit strategy | Transworld Business Advisors of Denver

Top 5 Ways a Seller Can Make Themselves Attractive to a Buyer: Industry

When business owners are preparing to sell their businesses, there are many ways they can make themselves attractive to buyers. As we represent many current and new business owners in Colorado, we have compiled the top five ways sellers can make themselves attractive to buyers. In Part 2 of our series we will focus on ‘Industry.’ To read the full series, click here.

We all know industries experience ups and downs. Factors that might affect whether an industry is hot or cold include; market dynamics, government regulations, new technology, and whether or not an industry is desirable. Ultimately, whether an industry does better or worse from time to time depends on supply and demand.

For example, frozen yogurt was in high demand 5 years ago. Everyone wanted a new store because there was limited supply and the market was demanding new stores. Now there is a frozen yogurt store on every corner – over supply and under demand – which will affect the value of the company and whether the buyer wants to enter the market.

For a buyer, a business in a stable, consistent industry is desirable. Traditional industries such as construction and manufacturing tend to be more consistent and have fewer threats than say the frozen yogurt industry. Ultimately, buyers want to enter markets that have growth potential versus markets decreasing in value or with strong threats that will decrease the value of the industry in the future.

Selling a business is a complicated manner. If you have additional questions, please contact one of our Colorado business brokers at 720.259.5099 or email us. You can also read more about our seller services at this link.

Top 5 Ways a Seller Can Make Themselves Attractive to a Buyer: Organizational Structure

Part 2: Organizational Structure

The way a business is structured is a major factor for buyers. In general, business structure is the framework on which the business is run. This can include but isn’t limited to the organizational structure of a business– directors, managers, and the various roles of staff.

A key aspect of business structure as it relates to the sale of a business is how involved the owner is with the customer facing activities such as sales, customer service, or customer retention. For example, if the owner of the company is client facing and directly impacting the majority of the sales of the business, a buyer may believe it will be difficult to continue those sales once the owner is no longer with the company. It is imperative, therefore, that the sales of a company do not rely on an owner solely. This is a huge ‘red flag’ for potential buyers.

Sellers can remedy this situation by transitioning the owner out of client-facing roles. They can begin to implement and/or hire account managers that will take over this role making the business more attractive to potential buyers.

In summary, it is essential to ensure that a business structure doesn’t rely on an owner. Buyers want to ensure that a business will still be able to maintain its revenue once the owner has transitioned out of the company.

In our next issue we will explore the next important way a seller can become more attractive to a buyer: reputation. Our next issue will be posted on Wednesday. To receive our newsletter with ongoing information for both buyers and sellers of businesses, click here.

Fall 2014 Seminar Series Schedule

Transworld Business Advisors of Denver, Colorado will begin our fall seminar series this September. Our seminars are designed to help business owners understand and plan for the growth or exit of their business. Our seminars have two focuses: how to sell your business and plan your exit, how to franchise your business. Each seminar is open to any business owner in Denver, however each event is limited in attendance.

Exit Strategy Planning for Business Owners
September 24, 11:30 – 1:30 PM
Elway’s Restaurant
2500 E 1st Ave, Cherry Creek
Lunch Provided
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Our Exit Strategy Planning seminar is co-hosted with Destiny Capital and Lintzenich Law. We will address how entrepreneurs can exit their business through a variety of ways including selling a business, transferring ownership to employees or family, or liquidation.

How to Franchise Your Business
October 8, 12 – 1:30 PM
240 Saint Paul Street, Suite 102
Lunch Provided
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Our Franchise Development seminar will discuss the legal, management, and sales aspect of the franchise industry. We will address such things as the FDD, royalty structures, and how to sell new franchises.