Some business owners worry that a niche will limit their opportunities and they’ll miss sales. But a niche can often be the key to growth. What’s more, it can increase your overall business value.
How old are your key employees? This is becoming one of the key issues buyers care about when acquiring a business. It’s not a case of agism – buyers would love for your senior employees to stay. It’s about risk and how soon the business’s pivotal people are going to retire.
What does it feel like to sell your company? Many business owners say it feels like giving a child up for adoption. As it turns out, that’s not just a metaphor. Research shows entrepreneurs really do think of their business as a kid.
Management team ranked number five on the buyer due diligence list. A good succession plan and backup support is still incredibly important to the saleability and value of your business, but it seems that the strength of your overall employee team is – at this moment in time – an even bigger priority.
In the latest IBBA and M&A Source Market Pulse Report, a quarterly survey of M&A advisors, employee issues topped the list of buyer due diligence concerns. Employees, specifically longevity, loyalty and work ethic, ranked ahead of other priorities like operations, revenue and customer concentration.
For many entrepreneurs, the business becomes their identity. It gives them direction. Without that outlet, some former business owners become unmoored. Suddenly, their phone isn’t ringing as much. No one needs them to make hard decisions anymore, and that can be troubling for some folks.
If you work in M&A, you can take a class on how to take advantage of people. It’s true. Buyers can go through mergers and acquisitions training, at some of the most prestigious universities, learning how to pay has little as possible for a family-owned business or privately held company.
When buying a business, one of the qualities buyers look for is barriers to entry. The harder it is for someone to get started in your business or take away your customers, the bigger the barrier.
I don’t know of anyone whose business wasn’t affected, at some level, in 2020. Businesses were either on the covid slump or the covid bump.
As part of our annual State of the Market M&A conference, held virtually this winter, we invited three private equity (PE) firms to review and submit an offer on a hypothetical company. They revealed their offers at the conference, and we held a panel discussion on why they valued the company the way they did.