…what makes a business attractive?
If you’re considering selling, securing investment, or even strengthening your business for the future, you need to understand what makes a business valuable in the eyes of buyers and investors. Whilst revenue and profit are both important, deals are won or lost on much more than just the numbers. Buyers want a strong, resilient, and scalable business, that can thrive without its current owner and has clear opportunities for growth.
The key value drivers
A business that runs without you
A company heavily reliant on its owner is a red flag. A strong leadership team and well-documented processes add value.
Recurring and predictable revenue
Subscription models, robust contracts, and repeat customers make a business more attractive. Stability results in a higher valuation.
A well-diversified customer base
If one client accounts for 40% of your revenue, that’s a risk for buyers. The more diverse your customer base, the stronger your position.
Scalability and growth potential
A buyer or investor wants to see clear opportunities to grow, whether through expanding into new markets, launching new products, or improving efficiency.
Financial transparency and clean records
Messy or unclear finances can negatively impact a deal. Buyers need to see transparent, well-organised records that make due diligence easy.
A common mistake: Business owners often focus on short-term profitability rather than long-term value creation. The strongest businesses make themselves attractive before they need to sell.
Transaction spotlight
We recently advised on the sale of Portabar Ltd, a leading manufacturer of bespoke, high-end portable bar systems used around the world. Below, we’ve outlined what some of its key value drivers were which made it appealing to its buyer, Create Cocktails Ltd:
A confidential chat tailored to you
Curious about what your business is worth and would like to discuss a valuation, or any of the above in further detail? Please get in touch with us at any time.
