What buyers actually look for

The short version

• Serious buyers check the same short list every time. None of it is mysterious.
• The list is about risk: how sure a buyer can be that the earnings keep arriving after you leave.
• Owner dependence comes first. Then whether the books can be believed. Then customer concentration. Then anything that expires at the handoff.
• All four are fixable with time. None of them needs to be fixed this quarter.
• Every one you take care of widens the field of buyers and moves the number. They are worth doing even if you never sell.

Why the list is short

A buyer is paying for earnings that have not happened yet. Everything they look at is a way of asking one question: will the money still arrive when the person who built this is gone?

That is why the list is the same for a machine shop and a landscaping company. The trade changes the details. The question does not.

Can it run without you?

The first question, always.

If the business is really you with a crew attached, then a buyer is not buying a business. They are buying your job. Your relationships with the customers, your estimates, your Tuesday-morning problem solving. When you leave, those leave with you, and the buyer knows it.

The more the business runs without you, the more of it there is to sell.

A useful test: what happens if you take two weeks off with the phone switched off? If the answer is that the crew handles it and a few things wait for you, the business runs without you. If the answer is that it falls apart by Thursday, that is the thing to work on first.

What you can do. Hand off one thing at a time. Let the foreman quote the next three jobs. Give the office manager the bank login. Put the supplier relationships in someone else's name. The goal is not to retire from your own shop. The goal is a business that survives your vacation.

Can the numbers be believed?

Buyers discount what they cannot verify. Their lenders will not touch it at all.

Books prepared by an accountant turn "trust me" into "check for yourself." That matters more than most owners expect, because a bank will lend against a verifiable business and will not lend against a shoebox. A business a bank will finance has more buyers who can actually pay for it. More buyers means more competition, and competition is what moves the multiple.

The other half of this is add-backs: the personal expenses the business carries that a buyer would not have. They are legitimate, and they raise the earnings figure. They are also the first thing a buyer's accountant will pick apart. An add-back you can document is money. One you cannot is an argument.

What you can do. One clean, accountant-prepared year beats five messy ones. Start with this year. Keep personal spending out of the business account from here on, or keep a list of what went through it and why.

Does any one customer hold the keys?

If a single customer is a large share of your revenue, every buyer will ask the same question. What happens if that customer leaves the week after closing?

You will hear the answer as a lower offer, or as a deal structure that puts part of your price at risk until the customer proves they are staying.

There is no fixed line. What a buyer sees is the shape of the list. Ten customers of similar size look like a business. One large name and a tail of small ones looks like a contract that might not renew.

What you can do. Every new customer below the big one shrinks the risk. Watch the percentage, not the total. If the big customer is on a handshake, ask whether they would sign a service agreement. A contract that transfers is worth more than a relationship that does not.

Will anything expire right after they buy?

A month-to-month lease. A supplier deal that exists only in your head. A license in your name rather than the business's. A key employee with no reason to stay.

Anything the business depends on that could vanish at the handoff gets priced as risk. Sometimes it gets priced as a reason to walk away. A buyer who loves the business and cannot get the landlord to sign a lease does not have a business to buy.

What you can do. Longer terms, transfer clauses and paperwork in the business's name, arranged before a buyer ever asks. The lease is the one to start with. A landlord will usually talk about a transferable lease years before a sale, and rarely wants to talk about it the week of one.

What this adds up to

None of this needs to happen this quarter. Most of it takes years, which is exactly why it is worth knowing about years early.

Every item you take care of makes the eventual handoff calmer, widens the field of buyers and moves the number. And a business that runs without you, with clean books and customers who stay, is a better business to own in the meantime. Whether or not you ever sell it.