Everyone wants to sell for top dollar.

But achieving top price from a purchaser requires a focus on the five things a buyer values most.

Valuation is simply a factor of Risk x Profits, and these are the risks a buyer sees.

1. Build or Buy?

When corporations buy their question is whether the time and money to build a similar business from scratch may be greater than the cost to buy now.   So the business needs to be different and hard to replicate, eg., could a competitor easily replicate your products and services?   Train a team like yours?   Acquire a customer base like yours?

2. How is Financial Performance?

Buyers thoroughly check financials.   They must see strong and growing revenues and profits.   Declining revenues significantly decrease valuations, so build growth.

3. Would it be   easy to run your business after acquisition?

Buyers want a business simple to run and will pay a premium for that.   Do you have systems so the business runs consistently?   Are employees trained to handle key issues that arise?   Will customers continue to buy if you're not there?   Make sure the business will run smoothly.

4. Is the customer base stable?

Everything else depends on keeping customers.   It is rare to have contracts, but ideally, do customers return regularly, or have a preference for your products or services.   Having a diversified customer base helps too, rather than a few larger customers, because if one leaves a large chunk of revenue goes too.

5. What are the odds for sustainable future growth?

Answers to the four questions above helps to decide on the odds for future growth.   There will be more buyers who will pay a premium for a stable customer base, growing financials, a unique business, and one easy to run.

More buyers means the price is bid up.   One of your key objectives should be to increase the value of your business even if you are not ready to sell yet.   Always make sure these factors exist as it can take two or three years to get ready to sell.