What investors look for when buying a business?

When looking to invest in or buy a business, most private equity houses, family offices and individual investors usually have a screening checklist that you need to pass before they evens start to dedicate significant resources to you. I have listed the main things that we look for and although there are many variants to these, they should give you a taster of what to be prepared with.

1. How much money are you looking for? Different investors will be looking to invest different amounts. Some may be looking for minority stakes, others for control. The total amount being invested really depends on the valuation and what the investor is looking for. We for example don't have a cap but typically look for a controlling stake in companies that have a turnover between £1-20m.
   

2. What growth prospects does the business have? The investor is looking for the best rate of return on his money. Showing the investor that you already know how to achieve this, are unique enough in your market offering that you can survive for the foreseeable future, are in a robust market, have strong governance and a independent management team in place will go a long way to providing that comfort.
   

3. Strong financial records It's important that you have your financial records (profit and loss statement, balance sheet and cash flow statement) in order as this will be one of the first things you are asked for. Make sure you can talk to your unit economics.
   

This is just the first step in the sales process but an essential one for getting the process jumpstarted. If you want to talk to someone about getting ready for a sale just click HERE and someone will contact you within 24 hours.

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