A business
opportunity in this context is any up and running business which has the
capacity to deliver a return on the buyer’s investment. This requires 2 major
elements in place:
Firstly, the
business will be delivering a product or service with a proven demand in the
marketplace. Starting up a new business involves testing the level of demand
for service, which can result in success or failure. By buying an existing
company with a proven level of demand, a buyer eliminates a major source of
risk, thereby increasing the likelihood of a return on investment. Ideally, the
demand should show a reasonable level of likelihood of remaining in place for
the intended life of the company. This means the buyer needs to understand the
sector they are buying into and the trends which will affect that sector for
the next few years or more. The best business opportunities are those where
demand is very stable over time or where significant growth is expected.
Secondly, the
buyer needs to possess the necessary background and knowledge to drive the
business forward. This means that the business must be a good match for the
buyer’s interests and skills – a sound business opportunity for one buyer may
not be so sound for another. Alternatively, if the buyer is not going to
personally run the business, there needs to be a strong management team already
in place or which can be put in place to run the business on the owner’s
behalf. The best business opportunities are those where there is scope for
significant growth and expansion over the current performance. Businesses are
priced based on performance to date, so the more scope there is to improve on
the current performance, the better return a buyer can achieve relative to
investment level. But growing a business requires vision, energy and skill to
achieve.
At Axis we take time to analyse the requirements of our prospective
buyers and match them to business opportunities for sale. This ultimately
benefits both sellers and buyers. Sellers have prospective buyers who can see
the value and potential in their business, making a successful sale for a fair
price more easily achievable. Meanwhile, buyers are introduced to business
opportunities most likely to match their requirements and produce the career
and/or monetary returns they are looking for.
Robin Boxall-Hunt, Managing Director of Axis Partnership
