The preparation of the business opportunity and the positioning of it in the market will begin with questions. Below is a short sample list of these questions supported in a current forum where we participated. The first component is gathering information and being ready for future discussions intended to lead to a mutually beneficial business relationship. Any good sales pitch starts with who are you, what do you do, what makes you different, and why. Looking at a business for sale opportunity as a buyer will travel a little further. You will be able to answer the above questions and more. This will become more important for future engagements and meetings with other equity seekers.
Business owners have managed the overall operation of the business for years and now it is time to create the picture and presentation of it. A business profile for selling a business will go a long with in documenting, answering upcoming questions about the business opportunity and for the overall purpose of value. This one instance that will enable the business owner, and partner equity owners when applicable, to prepare and position the business based on a period of time, in cases, upwards of three to five previous years. This is a significant amount of time to account for along with the present, and as well, past revenue and annual growth is fundamental in where the business is headed and how efficient the business is in terms of operations and the management of it.
Documenting and creating a business profile is essential for many reasons as provided above. More so, it will offer an overall picture of the business and will determine its path for success. Determining the strength of the business and what it offers along with knowing perceived weaknesses are all opportunities. Identify opportunity in both areas and what it means.
Being organized has always saved time. Here, with a business profile, many of the business facets will help identify the most applicable purchaser prospects of the business for sale for equity investment seekers. This will also save time in the long run for you and everyone as it is a longer sales process.
Future discussion will lead to a question like this. Is the opportunity for me or is it not? Perhaps, you need show me why it is the right opportunity based on the business and many aspects it represents from a business stand point: services, revenue, employees, top customers, real estate, future business operations, technology, software, databases, and so on. Terms are best created by synergy and flexibility in both parties at the table.
Below is a sample list of questions including:
Business Culture & Employees
What is the corporate culture?
How many employees and tenure?
What are their job responsibilities, titles, and who reports to whom?
What agreements exist? (Non-disclosure, etc.)
What is the compensation of each of the employees?
Is compensation average or above average?
What benefits are provided and what is the expense?
What is the owner and partner compensation?
What benefits through a merger can improve or lower expenses?
Customer Base – Revenue
How many total customers?
How many customers per office?
How long has the business been servicing these customers?
What is the market share comparative to other competitors based on the parameter decided?
What type of services offered?
How many services are there?
What services account for what percentage of revenue? How has this changed over the years?
What services does the business offer that we do not as a buyer?
What services derive the majority of revenue?
Who are the top 10, 20, or 30 clients and what do they contribute each for total revenue and in what service areas?
What is the work in progress (WIP)?
What work has been billed, but not yet collected?
Where and how do sales occur?
What is the annual percent of growth?
What percent account for online purchases vs. offline?
What is the billing process and what are the associated fees to do business?
Furniture-Fixtures-Equipment *FFE
What FFE exists in each location?
What FFE is available for purchase?
What is the age of FFE?
What FFE is not available for purchase?
What was the initial purchase price of each item? What is today’s fair market value?
To replace all equipment today, what it is the price?
Ownership of Commercial Real Estate
Is the owner interested in selling the building(s), leasing, or both options apply?
What is the value of the property?
What is the age of the property?
Is there a current tenant or tenants? What is their lease term and notice period?
Has the commercial property or commercial properties been appraised and when did this occur?
What is the market value today?
Is the purchaser interested in acquiring the commercial space?
If not, will the owner consider leasing it to the buyer or to another party?
Will the owner consider leasing to new business owner(s) to create business sale and for what duration of time?
If the new business owner leases the building and becomes interested in purchasing the building at a later date, is a first right arrangement available?
What improvements have been made to the building during ownership?
What upcoming improvements will be needed and how much will it cost?
Are there other parties presently that would known to consider buying or leasing the commercial property or commercial properties?
What is the annual expense of owning the commercial property or commercial properties versus leasing or moving the business?
Will the annual cost increase or decrease? Why?
Lease
What are the parameters of the lease assignment(s)?
What is the cost per square foot?
How long is the lease term?
Can the lease be terminated or transferred? (For relocating or moving office space into buyer space.)
Does the buyer have adequate space to accommodate employees of the acquisition in my space or their space?
Technology & Software (T&S)
What technology and software presently exist?
What systems are compatible with prospective buyer groups?
What systems are not? What adjustments, cost of purchase/license of T&S, and transfers needed?
How long will it take to set up technology and communication?
How is customer data managed?
How does this pertain to billing?
What is the expense of T&S?
Positioning a Business for Sale
What transition will be offered and for what period of time?
What compensation will be offered?
What is the prospective deal structure?
What is the value of the business?
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