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Our simple FEISTY Framework will help you quickly evaluate your business so you can find and eliminate the risks that make buyers pass.
The FEISTY Framework is a list of the key attributes a business needs to sell fast. Each attribute make up the acronym FEISTY. If a business is FEISTY, it will sell quickly for a good price, with good terms. During this workshop you will learn about each of the FEISTY attributes and score your business to find out if it is FEISTY.
The first thing buyers will look for is volatility in earnings. Buyers need to know your business will continue to grow following the sale. 1. Has your business been profitable for the last three years? 2. Does your business have is stable and growing revenue? 3. Do you have less that 50% customer concentration? 4. Can you quickly produce financial and management reporting?
Buyers expect financial and management reports that clearly demonstrate the health of your business. 1. Are your financials prepared on an accrual basis? 2. Are your financials audited? 3. Can you produce a quality of earnings report ("Q of E")? 4. Do you routinely produce monthly management reports? 5. Have you set up and populated a virtual data room ("VDR")?
More than any other measure, having your industry in favor will make buyers interested.When your industry is in favor you can expect: 1. Better pricing 2. Better terms 3. Higher likelihood of close ("VDR")?
Most investors are looking for businesses fit their desired industry, size, and location. If you’re the wrong size, they tend not to invest. Institutional investors typically won't consider businesses that are less that $10 million.
When we talk about the timing being right, it has to do with the willingness and ability of the business owners to sell the business. 1. Is there a consensus among your owners that the timing is right? 2. Do the life circumstances of your owners support selling? 3. Can your business invest the money and time to support a sale?
A buyer will ask how your business will run if the owner leaves. Will key suppliers lose their connection? Will key accounts consider other firms or renegotiate their contract terms? In short, if the founder leaves the business, will it blow up? If buyers perceive there is a material risk to your business revenues from the owner leaving the business, they may incorporate risk sharing measures into the purchase price, such as earnouts. Or they may decide not to bid on the company at all? 1. Is the owner managing all the key accounts? 2. Is there a leader the is groomed to take over when you sell? 3. Are your business processes recorded, routinized, and trained?