What Makes a Business Salable? A Plain and Simple Answer

March 09, 2018Exit Strategies, Financial Integrity, Insights

I’m willing to sell something to you. You’re willing to buy it from me. We agree on a price. You receive the item for the price. I receive the price for the item. That’s it. We’re done.

The science behind any transaction is pretty straightforward. But, when it comes to selling a business, the simplicity often gets muddled. What makes a business salable? It’s not the revenue, the growth, the stability, or all of those factors combined. We’re not talking about how to maximize the sales price for your business. We’re just talking about being physically able to sell the business, which we can boil down to these two must-haves: 


  1. A Buyer

You’re going to be surprised at how uncomplicated I’m making this. First, to sell your business, you need a buyer—or, even better, multiple buyers who will bid against each other.

To attract buyers, your business needs to show the potential for return on investment. Some people buy a business to have a flexible job and a company they can call their own. Others buy a business as an investment in which they seek to build equity. Regardless of their reason and vision, a buyer needs to believe they will see some sort of return on the money they would spend to acquire the business.


  1. Transferability

Return on investment in buying a business requires a degree of transferability, meaning the business can be transferred from its current owner to the new owner and continue to thrive.

Transferability is particularly challenging in trade businesses, where the business is often reliant on the owner themselves to make money. For example, a doctor could sell their practice to a new owner, but there would likely be a huge drop-off in patients, as many were visiting because they liked that particular doctor. Once someone else takes over, the name and reputation don’t hold any longer. The same goes for many small businesses in professional services, from contracting to accounting to You-Name-It, LLC. Any time the owner is the key to the business’ success, transferability is a challenge and the lack-thereof requires us to lower the sales price accordingly.

You probably thought this article would be much longer, but it doesn’t need to be. If you’re looking to sell your business, the name of the game is to 1) attract as many buyers as possible, and 2) make your business as transferable as possible. If you’re looking for consultancy and guidance in both of these areas, contact Exit Consulting Group. We’re here to help you build and follow a strategy for the successful, rewarding business exit you envision.