One of the key considerations if you’re looking to sell your business is understanding whether your business is ready for a smooth transaction or not. Buyers will be looking for a business that’s financeable, which is crucial when it comes to receiving all cash at closing. Here’s what you need to know, and how Duran Advisors can help you to get your business in shape before listing it on the market.
The Importance of Clean Financials
As a business owner, it’s essential to have clean, well-organized financial statements. If you’re hoping to attract buyers who want to finance the purchase through something like SBA loans, you’ll need to ensure your financials are in order. This means avoiding running personal expenses through the business accounts, which can cloud the true profitability of your business. Even if you can recast the financials and show a strong profit, lenders may still reject financing due to lack of transparency.
If your business relies heavily on tangible assets, traditional financing may still be possible. However, if your business operates in a space where intangibles dominate, a thorough business valuation service can help define its market value and assist you in the preparation process.
Also read: What Are the Business Valuation Factors?
Is Your Business Bankable?
The concept of “bankability” should be top of mind for any seller. In my years as a business growth advisor, I’ve encountered two main types of businesses: those that are bankable and those that are not. Bankable businesses have structured financials that inspire confidence from both buyers and banks. Non-bankable businesses, on the other hand, often show signs of risk due to poorly managed financials or excessive liberties taken by the owner in expense reporting.
As a seller, it’s vital that you can identify which category your business falls into. If your business is not bankable, you may find yourself in a position where no bank is willing to finance the transaction. This could mean you’ll need to finance the sale yourself, either through seller financing or a promissory note. Working with a business growth consultant can help you navigate these challenges and ensure your business is as attractive to buyers as possible.
Why Buyers Care About Financeability
Buyers are not just looking for a profitable business—they want one they can secure financing for. If your business is financeable, it becomes significantly more attractive to prospective buyers. Most buyers aren’t in a position to pay the full price upfront and rely on financial institutions for assistance. This makes the overall structure of your financials, from revenue streams to expense tracking, a key factor in determining your business’s value.
Preparing for the Sale
To ensure your business is financeable, you should start preparing well in advance of your sale. This involves more than just sprucing up your financial statements—it requires an in-depth look at every aspect of your operations. Engage in a business valuation service to identify any weak points that could deter potential buyers. Clean up operational inefficiencies, address outdated processes, and ensure your business is running as smoothly as possible.
If you’re unsure where to start, working with Duran Advisors, your trusted business growth consultant in Louisiana, can provide valuable insights. They can guide you through the necessary steps to improve your business’s appeal, ensuring you achieve the best possible outcome during the sale.
Conclusion
Selling a business is a complex process that requires careful planning and preparation. At Duran Advisors, we are committed to helping you navigate every stage of the sale, from determining whether your business is bankable to ensuring it’s prepared for financing. With clean financials, a strong operational foundation, and the expert guidance of Duran Advisors, you can make your business an attractive option for buyers and ensure a smoother, more successful transaction.