It is smart to establish sooner rather than later what provides value for a buyer of your business.  You may get a rude awaking by wait until you are ready to sell to find out your business is not what you thought.  Higher value means you a higher price for your business.  This information comes from over 45-years of selling businesses.

  1. Increasing sales and cash flow, with a 20% or higher owner benefit is the most appealing.
  2. Credible financial information/records and full disclosure of all known factors that contribute to the value of the business
  3. Repeating customers, customer diversity, limited customer concentration.
  4. Employees: Ideally, almost all customer contact is with employees, not the owner, low turnover, tenure.
  5. Growth potential, ability to scale-up
  6. Machinery, tools and the facility, well maintained, clean and good working condition.
  7. High barriers to competitive entry are
  8. A low amount of money tied up in inventory.  Inventory needed to run the business is typically considered as part of the purchase price, which will lower the multiple of earnings.