--- title: What Is Your Business Attractiveness Score? description: Do you know how attractive your business is to potential buyers? Read this blog post to learn what buyers are looking for and steps you can take to prepare your business for transition. image: https://www.tworldnorthstar.com/hubfs/Faces.jpeg --- **[![phone](https://www.tworldnorthstar.com/hubfs/2020%20Website/white-phone-solid%20(1).svg "phone")(888) 290-5232](tel:888-%20290-5232)      ![envelope](https://www.tworldnorthstar.com/hubfs/2020%20Website/envelope-solid-white.svg "envelope") [northstar@tworld.com](mailto:northstar@tworld.com)** [![TRANSWORLD-LOGO-2023-2Color-VF-02](https://www.tworldnorthstar.com/hs-fs/hubfs/Tworld%20Logos/TRANSWORLD-LOGO-2023-2Color-VF-02.png?width=1801&height=600&name=TRANSWORLD-LOGO-2023-2Color-VF-02.png "TRANSWORLD-LOGO-2023-2Color-VF-02")](https://www.tworldnorthstar.com/) ![4 Team members](https://www.tworldnorthstar.com/hs-fs/hubfs/2020%20Website/Imagery/4%20Team%20members.jpeg?width=1350&name=4%20Team%20members.jpeg "4 Team members") # Transworld Blog From business brokerage to mergers and acquisitions; we are the business sale specialists. - [Business Value](https://www.tworldnorthstar.com/blog/topic/business-value) # [What Is Your Business Attractiveness Score?](https://www.tworldnorthstar.com/blog/what-is-your-business-attractiveness-score) [Read More →](https://www.tworldnorthstar.com/blog/what-is-your-business-attractiveness-score) - [buying a business](https://www.tworldnorthstar.com/blog/topic/buying-a-business) - [selling a business](https://www.tworldnorthstar.com/blog/topic/selling-a-business) - [For Entrepreneurs](https://www.tworldnorthstar.com/blog/topic/for-entrepreneurs) - [Case Studies](https://www.tworldnorthstar.com/blog/topic/case-studies) - [**](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.tworldnorthstar.com%2Fblog%2Fwhat-is-your-business-attractiveness-score) - [**](https://www.twitter.com/share?url=https%3A%2F%2Fwww.tworldnorthstar.com%2Fblog%2Fwhat-is-your-business-attractiveness-score) - [**](http://www.linkedin.com/shareArticle?mini=true&url=https://www.tworldnorthstar.com/blog/what-is-your-business-attractiveness-score) [All Posts](https://www.tworldnorthstar.com/blog) # What Is Your Business Attractiveness Score? - [Tweet](https://twitter.com/share) # What Makes A Business Attractive To A Buyer? Buyers purchase businesses for a return on their investment.  Sellers base the business value on past performance, while buyers place the value on the future potential profits and risk level to achieve them.  When the seller puts themselves in the buyer's shoes, it will be easier for them to understand what buyers are looking for and why, and be better prepared for a successful transaction.  Read on to find out what buyers are looking for and [what steps you can take](https://www.tworldnorthstar.com/blog/ten-steps-to-selling-your-busines) as a business owner now, to prepare yourself and your business for a sale in the future.   ## Different Kinds of Buyers Attractiveness depends on the type of buyer interested in the business.  There are three main types of buyers who have different goals and criteria.  Each business is judged on how it meets a buyer's needs.  Knowing ahead of time [what buyers are looking for](https://www.tworldnorthstar.com/blog/3-things-buyers-look-for-what-to-expect-when-selling-a-business) and their motivation for buying can help business owners prepare. - **Strategic Buyers** are buyers that want to diversify, expand or eliminate a competitor.  Strategic buyers therefore may be friendly competitors, clients or vendors of your business.  They could be a business in an adjacent sector that wants to diversify or bring a product/service in-house, or a similar business expanding their footprint, or a direct competitor from another market.  Strategic buyers may be willing to pay based on a higher multiple of cash flow depending on the value of the acquisition to them. Strategic buyers typically will purchase businesses with revenue over $1,000,000 and earnings over $300,000.  - **Investors** are private equity firms or private individuals seeking a return on their investment within three to five years by growing and re-selling the business.  Investors will look for businesses not reliant on the owner that have clear opportunities for growth by adding cash or resources. They may pay a higher multiple of cash flow or EBITDA (earnings before interest, taxes, depreciation and amortization) for the business depending on the potential for return on their investment (ROI).  Investors, however, require a LOT of detailed reporting and time from the owner before a decision is made.  It can take up to a year of an owners time and effort just to learn that the investor decided to withdraw.  The upside is that investors that do move forward will typically pay more for what they are looking for, anywhere from one to millions for the right opportunity. - **Owner/Operators** are individuals that want to buy themselves a job.  Some buyers may purchase a business more as a hobby while others want to earn a living for their family. Typically owner/operators will purchase businesses from between one hundred thousand to a million dollars.  They are also looking for opportunities where the cash flow of the business will pay them a salary and pay down the debt used to acquire the business.  Owner/Operators will typically be purchasing the business through a combination of savings from their 401k (401KRob) or SBA or conventional bank loan and some amount of seller financing.  Banks like to see the seller have skin in the game and be motivated to help the buyer succeed. ## What Buyers Look For: Buyers are looking for a business they can grow and continue to generate profits from, at a risk level they are comfortable with.  So what things help them feel more comfortable with that risk?   - Steady Increase In Profits for Three Straight Years - Steady Increase in Revenue for Three Straight Years - Established Customer Base - Residual Income Stream - Established and Good Reputation - Documented Process and Procedures - Positive Cash Flow - Minimal Reliance On Owner  - Growth Market Segment - Employee longevity and skills Businesses that are not reliant on the owner, have positive cash flow and sales trends, have trained staff in place that will stay on after the merger or acquisition, have documented processes and procedures in place, a good reputation, steady client base, and residual income are businesses that tend to sell.  How does your business "score" in these areas?  More importantly, [are YOU ready to sell your business](https://www.tworldnorthstar.com/sell-a-business-original) personally and financially? The first step in the process is to talk to an advisor.  We may suggest a Benchmark Broker Opinion of Value and Value Gap Analysis that gives you a road map of steps to take to prepare your business for a sale.  Contact us today for a complimentary consultation.  It is never too early to start planning your transition. [![Thinking about chasing your next adventure? 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Where you might imagine pop-up tent trailers going for $15–20K, the owner and his team specialized in high-end adventure vans, or “Class B” RVs, ranging between $100–200K. - [Transworld Business Advisors](https://www.tworldnorthstar.com/blog/author/transworld-business-advisors) - 4 min read - Jan 11, 2024 3:17:00 PM ## [Case Study: How Transworld Helped PWC Sell Their Business in 7 Months](https://www.tworldnorthstar.com/blog/case-study-how-transworld-helped-pwc-sell-their-business-in-7-months)   Sales Timeline: 7 Months   The Background Professional Wireless Communications. Inc. (PWC) has provided reliable and affordable two-way radio solutions in Minnesota and Iowa for 25 years. The company has a loyal and diverse clientele, from schools and hotels to casinos and stores. Pat and Paula Green, a husband-and-wife duo, started the business from scratch. With Mark, their salesperson and 20% owner, they have built a profitable and reputable enterprise. As they neared retirement, the Greens wanted to sell the company and focus on family. Mark also desired to sell, but remain employed by PWC. - [Transworld Business Advisors](https://www.tworldnorthstar.com/blog/author/transworld-business-advisors) - 4 min read - Aug 24, 2023 9:00:00 AM ## [Case Study: Selling a Pet-Sitting Business in Less Than 4 Months](https://www.tworldnorthstar.com/blog/case-study-selling-a-pet-sitting-business-in-less-than-four-months)   Sales Timeline: Less than 4 months Sale Price: $320k   The Background Located in the Twin Cities, the owner of Whiskers to Tails Petsitting had proven to be a successful entrepreneur focused on providing care for animals in the home. As a former employee, the owner took over the business in 2019 and successfully operated it through the COVID-19 pandemic. - [Transworld Business Advisors](https://www.tworldnorthstar.com/blog/author/transworld-business-advisors) - 5 min read - Aug 17, 2023 9:00:00 AM ### Your Goals Are Just the Beginning Talk to one of our Advisors today about next steps. 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