Quick reads
There are a number of factors which, if present, make a good case for a private buyer to be able to effect the purchase of an SME business. Some of these include:
- A business which has been in existence for over 10 years
- A business which has been for sale for over 6 months and has likely exhausted the idea of a trade or private equity sale
- A solid balance sheet, typically with over £250,000 net asset value
- A retirement sale
- A business where the owner might consider selling less than 100% of the equity
- Stable/growing profits, typically above £250,000 and below £1m per annum
- Positive cash generation
- Visibility of future growth for the prospective buyer
- An opportunity to introduce formal sales and marketing strategies in to the business
- Good and long standing second tier management team or at least someone in the team who can step up as General Manager/Manging Director in due course
- A niche or defensible product or sector position
- Some form of intellectual property (IP)
If many of the above are present, then there is a really good chance of a successful purchase taking place.