The most frequently asked question asked by potential buyers when selling your business is; How do you grow your business? This question is asked repeatedly throughout the sales process and right before you are ready to close, the buyer will ask it one more time; How are sales? What is your current backlog and how is your pipeline looking?

How you answer this question is critical to a successful transaction for several reasons:

  1. Business potential: Buyers are interested in acquiring businesses that have the potential for future growth. A well-documented growth plan demonstrates that you and your management team have a clear and compelling strategy to expand sales and increase profitability. This can make your business more appealing to potential buyers.
  2. Validates the investment: Buyers are looking for a return on their investment. A well-thought-out growth plan can provide additional support to potential buyers that the investment opportunity is a sound one, and that they can achieve a return on their investment over time.
  3. Mitigates risk: Buyers are always assessing risk factors associated with acquiring a business. A strong growth plan can help mitigate that risk by demonstrating that you have considered the potential challenges and opportunities and have a plan to address them. It shows that you have thought about the future and are taking steps to minimize risk.
  4. Competitive advantage: In a competitive market, a well-articulated growth plan can separate your business apart from the competition. It shows that you have a clear vision for the future and can execute on that vision, which can be a significant selling point.
  5. Maximizes value: A business with a clear growth trajectory and a well-executed plan is likely to command a higher purchase price than one without a growth strategy. Buyers are often willing to pay a premium for businesses with robust growth potential.
  6. Attracts the right buyers: By addressing the growth question, you can attract the right types of buyers who are specifically interested in your industry or market and are looking for opportunities for expansion. This can help you find the right type of buyers who are the right fit for you and your business.
  7. Supports negotiation: Having a growth plan can strengthen your position during negotiations with potential buyers. It can provide you with leverage to negotiate a better deal by demonstrating the value of the business and its future potential.

In summary, answering the growth question is essential because it provides clarity, confidence, and direction to potential buyers. It can help you attract the right buyers, maximize the value of your business, and increase the likelihood of a successful sale on your terms.

Osage Advisors provides a lot of guidance in the M&A market here on our blog and on our YouTube channel and Podcast.