Part 2: Organizational Structure
When business owners are preparing to sell their businesses, there are many ways they can make themselves attractive to buyers. As we represent many current and new business owners in Colorado, we have compiled the top five ways sellers can make themselves attractive to buyers. In Part 2 of our series, we will focus on Organizational Structure.
The way a business is structured is a major factor for buyers. In general, business structure is the framework on which the business is run. This can include but isn?t limited to the organizational structure of a business? directors, managers, and the various roles of staff.
A key aspect of business structure as it relates to the sale of a business is how involved the owner is with the customer facing activities such as sales, customer service, or customer retention. For example, if the owner of the company is client facing and directly impacting the majority of the sales of the business, a buyer may believe it will be difficult to continue those sales once the owner is no longer with the company. It is imperative, therefore, that the sales of a company do not rely on an owner solely. This is a huge red flag for potential buyers.
Sellers can remedy this situation by transitioning the owner out of client-facing roles. They can begin to implement and/or hire account managers that will take over this role making the business more attractive to potential buyers.
In summary, it is essential to ensure that a business structure doesn't rely on an owner. Buyers want to ensure that a business will still be able to maintain its revenue once the owner has transitioned out of the company.
In our next issue, we will explore the next important way a seller can become more attractive to a buyer: reputation.
Selling a business is a complicated manner. If you have additional questions, please contact one of our Colorado business brokers at 720.259.5099 or email us.