As a business owner, no matter how much control you have over the day to dayof your business you cannot always control the factors that determine the outcome of the sale of your business.
What you can do, however, is thoroughly understand these factors and focus on the parts you can control.
There are three variables that determine the outcome in the sale of any business. These are:
- The Business
- Industry Sector or Geographic Region
- Capital Markets
In this post, we will provide a brief overview, with a more detailed post on each one to come.
A business or businesses are at the core of any merger & acquisition strategy. Aspects of the business that matter are:
- top line performance
- bottom line performance
- the age of the company
- the work force
- the reputation of the business.
Industry/Sector or Geographic Region
Some industries are hot and others are not.
You can imagine a business that manufacturers floppy disks for computers not having as bright of a future as one that manufacturers solar panels. You can also imagine that businesses in areas of the country with high growth or a strong, affordable workforce as being more attractive than others.
The purchase of a business requires capital. Without capital, deals are simply theoretical desires no matter how strong the buyer is and their case for the acquisition.
As a business owner, you cannot control capital markets nor can you control your industry or theof your geographic region.
What you can control is your business and its alignment with growth industries.
You can also control when you enter the market to ensure you are selling in favorable capital market conditions versus being forced to sell when the markets are working against you.
In the next three blog posts, we are going to look at each of the variables above in more depth.
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