One of the main reasons why a business won't sell is because the owner places too high of a value on the company. The seller does not take into account what the buyer is thinking. A buyer wants to know how long will it take to get a return on his investment, what are the risks involved, and what exactly he is buying. Does it make sense for the buyer to purchase the business? Is the buyer paying all cash or will he need a loan. If the buyer is obtaining a loan, they will need to analyze the cash flow and see if they are able to service the debt, and how long it will take to recoup their investment. Does a buyer want to wait 7 years to get a return on his investment? In most cases, No.
Obtaining a new lease from the landlord can also hinder a business sale. Not getting the terms that makes sense for a buyer such as length of time so a buyer can recoup his or her investment, or a significant increase in the rent which will diminish the discretionary earnings of the seller.
A downward trend of revenues will affect the profits and cash flow. A buyer will wait and see if the trend continues and if so, will most likely purchase the business at a significantly lower price or not at all.
Another very important aspect of a business sale are the financial records. Inaccurate or incomplete records can be disastrous to the seller and the business sale. It is crucial to have accurate records to show the buyer exactly how the business is operated.
Does a significant amount of your company’s revenue come from one or two clients? Do you have solid contracts with these clients? If not, and if they decide to not do business with a new owner, the company’s value is greatly depreciated.
Can your business operate on its own? Buyers place a higher value on companies that can run themselves. An owner should delegate more of his or her responsibility to employees so the company relies less on the owner.
Is the business in a declining or obsolete industry such as video rentals, or is big competition driving out small mom and pop stores such as Staples has done to small stationary stores.
Does the Seller and Buyer get along. I had one of my business owners tell me that he doesn’t care about the
buyer and he "spits in his eye". Deals have been killed due to seller/buyer dislike for each other.
These are just some of the reasons why businesses don’t sell. And according to BizBuySell’s 2014 Insight Report, they have about 30,000 businesses at any one time and there was 1,650 to 1,890 transactions closed per quarter over the last five quarters. This means that only about 4 or 5 percent of the businesses listed on the site are being sold in any one quarter.
If you have any questions about selling your business, please Contact Certified Business Broker Robert Dean for a Free Business Consultation. Banner Business Sales, Inc. Phone: 310-709-1985. Email: firstname.lastname@example.org Website: BannerBusinessSales.com