Become a Finance Ace Business Strategies and Financial Tips for Everyone

Find out your loan specifically to suit your needs

The only answer to this is to try to find out in advance who, specifically, your buyers might be. In many closely-knit industries this is not too dfificult. For example, if you have an optician’s business you might be aware that the most likely purchasers of your business are franchise groups who are looking for operations like yours with a view to converting them into franchisees. In this case, it is obviously worth your while to establish in detail what these groups are looking for in target businesses (both with regard to management structure and, perhaps, gross margin levels) and then to tailor your business specifically with these buyers in mind.

Besides senior management considerations, it is helpful for you to understand what VCs and Business Angels expect by way of return on their investment. VCs will be looking for a high return and a likely exit in five to seven years. They are attracted to businesses that have a chance of going public, or being on-sold at a significant profit. (You need to bear in mind, however, that very few private businesses have a realistic chance of taking the flotation route.) Business Angels are a mixed bag of individuals. Some of them take a professional investment approach by seeking high returns through a three to five year exit (and will keep at arm’s length from your business in the meantime). Others will be quite happy to be involved in the business in a non-executive capacity with no particular rate of return, or exit time frame in mind: these people might be, simply, looking for something exciting to do!