10 Qualities A Company Must Possess To Be A Smart Investment

by ExitAdvisor · 18th August 2018

Patrick Galleher of merchant bank Boxwood Partners provides advice on the qualities that appeal to buyers of businesses.

In summary:

1. A Reasonable And Fair Asking Price

2. A Good Reputation

3. A Company That Runs Well Behind The Scenes

4. Solid Cash Flow

5. No, Low, Or — At Worst — Reasonable Debt

6. Market Potential For Growth

7. A Staff To Run The Business

8. A Great Location

9. Energy

10. A Good Strategy Fit

However, similar to marriages, they don’t always work out. For instance, the Quaker Oats Company famously purchased Snapple Beverage Corporation for $1.7 billion. That seemed like a perfectly smart move. It wasn’t. Less than three years later, Quaker Oats sold Snapple to Triarc Companies for $300 million. There are numerous other examples of failed acquisitions, but I’d rather focus on what can go right than what can go wrong.

So if you’re thinking of buying another company — or you’re looking to sell — remember that you should, of course, be focusing on an attractive company with plenty of potential. A successful acquisition should have at least these 10 qualities.

There’s a similar article with a few other observations at our sister site: How To Impress Investors