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14 THINGS TO CONSIDER ABOUT SELLING YOUR AND THE TRANSFERABILITY OF YOUR BUSINESS

Posted by garydamp

It is estimated that only 20% of businesses listed for sale will sell. Of those that are sold many of the new owners will fail to transfer successfully into new ownership. As a seller getting the ‘transferability’ of your business sorted can reward you handsomely for de-risking the purchaser.

Avoid selling stress consider 14 things

The sale value of your business is ultimately bound to how transferable the elements of your business are to someone else. Being transferrable increases your business attractiveness as well as the sale value by providing a higher business value multiple against your EBITDA (Earnings Before Interest Depreciation & Amortization) benchmark.

Here are 7 transfer considerations and 7 Mistakes commonly made

7 transfer considerations:

  1. Is the Business too dependent on you
  2. Can the People transfer (human capital)
  3. Can the Customer relationships transfer (customer capital)
  4. Can the Process and Technology transfer easily
  5. Can someone else learn the process
  6. Can Business continuity and growth transfer
  7. Will the Social Capital transfer – brand, culture, trust, and values

7 Transferability killers are:

  1. Poor or unsubstantiated financials
  2. No clear Market Dominating Position
  3. Owner & keyman dependence
  4. Poor documentation
  5. Lack of transferable systems and process (not repeatable) – No rhythm
  6. Risk – Product Liability, Lawsuits & contingent issues
  7. Customer risk – excessive customer reliance (1 customer responsible for 80% of revenue)

The best remedy is always to start with an end game in mind. Build value throughout the business cycle. Building from scratch with a focus on value, rhythm, and process will help. Behaving in the interest of the shareholders versus just the owner is a must. By following the vision, using discipline, and process the transferability of your business will be enhanced as with the saleability of your business

To learn how to create a great business and enhance transferability go to www.AdvancedBC.com.au/myguidedtour