Shock Buyers – Destroy their Trust!
Nothing scares a Buyer off quicker than financials riddled with Income and Expenses from other entities that you operate!
Why?!
- your Business (or the entity that owns the Business), is also paying the bills for your other activities…therefore, “are you also propping up the sales through cash and/or income injection from other sources?”;
- significant savings/privileges available through your “buying/selling power” may be lost when you sell the Business; and
- auditing and verifying Income and Expenses (and adjustments) from your other trading activities is near impossible, if at all!
If there’s substantial questions surrounding the financials, and Buyers have no clear evidence that the Business makes what you say it makes, then don’t be surprised if you don’t hear from them.
Even clean figures showing a low profit will be enough to entice a Buyer to make an Offer to buy your Business as they feel safe in knowing what their expected return on investment and risk is.
If you want to sell your business for a fair price and within a reasonable time frame, then be prepared to put in the hours to clean up your figures and/or be prepared to open up your records to verify the true trading performance of the Business.
A possible quick fix is to go through your Income and Expenses and remove all items or in some cases, the portion of the total item that is not directly related to the Business you’re selling. Once you’ve separated out these items, re-produce your Profit & Loss Statements and show this report to Buyers. Do not put this in the “too hard basket” as avoiding this task may see you with an unsaleable Business from anywhere between 6 months to 3 years!
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DISCLAIMER
The information contained in this post is an opinion based on past experience. Do not take this as financial or legal advice.