The Three Essential Attributes of a Sellable Business (And How to Achieve Them)

Welcome back to another edition of The Wise Exit!

I'm Brian Dukes, a Managing Partner at Exitwise.

In today's edition, you'll learn:

• The three essential attributes of a sellable business (and how to achieve them).

• How do you avoid paying taxes when selling your business (legally)?

• He turned down a $1 billion offer. Would you?

Let's dive in ...

The Three Essential Attributes of a Sellable Business (And How to Achieve Them)

Building a successful business is one thing. Building a sellable business is another.

What's the difference?

A sellable business possesses three key attributes that make it attractive not just to you but to potential buyers as well.

Attribute #1: Desirability of Results

Your business must produce results that appeal to a wide range of buyers. This means solid financials, a proven business model, and a clear path to future growth.

To achieve this, focus on creating a solid value proposition, diversifying your customer base, and developing a sustainable competitive advantage.

Attribute #2: Replicability of Results

Can a new owner step in and replicate your success? If your business is overly dependent on your personal efforts or unique skills, selling may be challenging.

The key is to create systems and processes that allow the business to thrive without you. Document your standard operating procedures, build a strong management team, and ensure your business runs like a well-oiled machine.

Attribute #3: Documentation of Results

Buyers want a clear, verifiable record of your business's performance. This means having detailed financial statements, customer contracts, and other critical documents readily available.

Invest in robust record-keeping systems and work with professional advisors to ensure your documentation is accurate and up-to-date.

By focusing on these three attributes, you'll create a more valuable business and make it infinitely more attractive to potential buyers.

Remember, a sellable business is not built overnight. It requires careful planning, execution, and a commitment to creating a company that can thrive long after you've moved on.

Featured Blog 📰

Selling your business can come with a hefty tax bill, but it doesn't have to. With the right strategies, you can legally minimize or even avoid paying taxes on the sale of your business.

In this featured blog post, we explore various techniques to help you keep more of your hard-earned money. From structuring your sale as a stock deal to reinvesting in a Qualified Opportunity Fund, we cover a range of options to suit different business types and situations.

Read the blog post: How Do You Avoid Paying Taxes When Selling a Business?

M&A Tips from Brian Dukes 💡

In 2006, Mark Zuckerberg faced a billion-dollar dilemma. Yahoo! offered to buy Facebook, a two-year-old startup, for a staggering $1 billion.

Zuckerberg shocked everyone when he turned it down.

Why? Because he had an unwavering vision for Facebook. He believed it could connect the entire world and knew he needed to maintain control to execute that vision.

Microsoft validated his instincts a year later, investing $240 million for a mere 1.6% stake in Facebook. This deal valued the company at $15 billion - over 15 times Yahoo's offer.

The lesson?

As a founder, your company is more than just a financial asset. It's the embodiment of your vision.

When weighing acquisition offers, don't just focus on the dollar amount. Consider whether the deal aligns with your long-term aspirations.

Sometimes, saying no to a quick payday can lead to far greater value down the road.

What would you have done in Zuckerberg's shoes?

For more M&A tips from someone who's been there, follow me on LinkedIn.

That's all for now.

Tune in next Wednesday for another set of M&A lessons, and have a great rest of the week.

Best,

Brian Dukes, Managing Partner