You know you have a valuable business on your hands. So why are buyers taking months – or even years – to bite? Often times, the answer is right under your nose. Here are some of the top reasons buyers are deciding not to make an offer on your limousine business.
Do your financials cleanly tie to one another? If not, you can’t blame a buyer for holding back. Many of us wouldn’t make a $100 investment if we couldn’t prove that it would pay off; a $1 million-plus investment is out of the question. Clear financial documents are necessary for buyers to clearly understand how they will be impacted by buying a limo business. Interested investors need to know how much cash flow to anticipate in the first month, and how much to predict in coming years. They also need to be able to estimate their tax burden. Not only do unclear financials complicate the sales process, they also paint your company in an unflattering light. If buyers think you have something to hide, they may view your company as a high risk investment and a potential liability.
Heavy Customer Concentration
Many industries go hand-in-hand with heavy customer concentration. In the chauffeur business, customer concentration is a normal and manageable issue. It’s not uncommon for a motorcoach company to owe much of its profits to a local university or travel organization, or for a limo business to rely on a nearby airport for many of its clients. Your buyers, however, may not realize this. When investors look at high concentration, they see high risk. If your top client were to switch companies, the investor’s purchase of your business could be a bust. One of the benefits of hiring a limo business broker is the ability to have an unbiased industry authority on hand. If your broker can communicate to buyers that a certain degree of customer concentration is a quirk of the industry, and not a problem limited to your company, they may be more likely to consider purchasing your limo service for sale.
There’s not much more frustrating than attracting buyers for your business without ever attracting actual offers. Many times, this occurs because buyers don’t understand the value of your business and don’t want to insult you by making what may be perceived as a low-ball offer. Investors are often trained to look at book value – in other words, the assets and liabilities a business has on paper. Unfortunately, this kind of valuation doesn’t include tough-to-calculate concepts like goodwill. A limo business is worth more than the sum of its limousines and buses. Branding, relationships, and reputation play a big role as well. With the support of a transportation business broker, you can enlighten prospective buyers about the accurate valuation of a limousine business – and improve your odds of receiving lucrative offers in the process.