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by alberth
891 days ago
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Be profitable. It’s implied when OP says “run a good business”, but as someone who’s been on the acquiring side - it becomes a lot harder to be the advocate to buy a company when it’s losing money. (The business case math gets hard fast, with unprofitable companies & introduces a lot more risk) |
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You can't sell "potential" but you can buy it. In other words a "good" company, with a "good" product, but running really inefficiently (and thus making a loss) can be very attractive to a buyer, if they can get it cheap. They might see that AWS line, or that Google marketing spend, or the giant sales team, or whatever and realize that by refactoring that part of the business they can extract a lot of value in the short term.
But this "potential" is not reflected in the price. You can't sell a business saying "oh, you just have to make AWS go away..." etc.
Ultimately any seller is saying "you're offering me a price where I think I get more cash now than waiting for later". Usually with time commitments built in.
The buyer is saying "you have something interesting, but I can get a lot more profit out of it than you are currently doing." Often by doing things you have specifically rejected (downsizing staff, cutting expenses, maximizing revenue etc)
Be aware that any _principles_ you have, which are suppressing your profit (open-source licenses, fair wages, pride in customer service, reasonable price increases, employee benefits, whatever) are all _almost certainly_ going to be changed after the sale. Those things are exactly where the purchaser is going to get their return from.