Wednesday, January 23, 2013

Could You Sell Your Business As Is?

Have you ever wondered if you could sell your business as is?  You may think you have an attractive and valuable company but, would a potential purchaser agree?  Are you ascribing value to sweat equity that a potential purchaser may not attribute value to?  Are you even aware of what a potential purchaser would be willing to pay for your business today?  To answer these questions, you must start thinking like a potential purchaser.
Knowledge is power and arming yourself with the knowledge of how potential purchasers view your business and what they would be willing to pay for your business is very powerful.  The Sellability Score questionnaire is a useful planning tool to help business owners think more like a potential purchaser.

The Sellability Score is an online tool developed by John Warrillow, author of "Built to Sell: How to Create A Business That Can Thrive Without You".  This innovative software helps business owners determine how easy it would be to sell the business as is and predicts the likelihood of receiving a premium over industry average multiples if the business were packaged for sale today.
The Sellability Score is a free and completely confidential self-assessment tool that scores your business in a number of key areas and provides information to help determine:
  • Whether your business is easy or hard to sell;
  • How to improve the sellability of your business; and
  • The questions you need to be asking before you sell your business. 
Business owners simply complete a brief online questionnaire to receive an immediate Sellability Score of between 1 and 100 for the business.  A detailed report is produced that provides insights into how buyers evaluate the business.  The report contains more detailed information on the eight key attributes of a sellable business and why these factors are so important.  It will help you pin point the areas in your business that need improvement in order to maximize the value of your company.  The 8 key attributes (which will be discussed in more detail in future entries) include:
  1. Financial performance
  2. Growth potential
  3. Switzerland structure
  4. Valuation teeter totter
  5. Hierarchy of recurring revenue
  6. Monopoly control
  7. Customer satisfaction
  8. Hub and spoke
The Sellability Score is the easiest way for business owners to begin the pre-sale planning process by identifying the company’s strengths and weaknesses (in terms of its sellability).  This questionnaire should be taken at least 3 years in advance of a sale or transition to allow time to implement value enhancement initiatives and other vital pre-sale planning activities.
You may not be looking to sell your business today.  However, an estimated $1.9 trillion in business assets (or 310,000 businesses) are poised to change hands over the coming 5 years.  The increasing supply of businesses for sale will create a buyer’s market putting downward pressure on sale prices over this time period.  The Sellability Score can provide you with vital information needed to command a premium price when it comes time to sell your business in a competitive buyer’s market.
To find out your company’s Sellability Score:


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