Two businesses with the same profit can sell for very different prices. The difference is rarely luck. Here are the six things a serious buyer will pay more for, and why.
When a buyer looks at a service business, they are not really buying last year’s profit. They are buying the confidence that the profit will still be there in five years. Everything on this list is a form of that confidence.
Contracts and maintenance beat one-off jobs, every time. A business with service contracts renewing each year is worth meaningfully more than one that re-wins its revenue from scratch every January, even at identical profit. If a portion of your work could be moved onto contract, doing it before a sale is one of the highest-return moves available to you.
No single customer should carry the business. Buyers look hard at what happens to the profit if the biggest name leaves, and they price the answer. A wide, boring spread of mid-sized accounts is worth more than a glamorous roster dominated by one logo.
A second tier who can make decisions is the single clearest signal a buyer can find. If quotes, pricing calls and unhappy customers all route through your mobile, the buyer is not buying a business; they are buying you, and they will price the risk of you leaving. Every decision your managers can take without you adds value.
Monthly management accounts a buyer can trust. Not statutory accounts filed nine months late: a monthly pack that ties to the bank, with revenue, margin and cash visible. Clean numbers do not just support the price; they speed the whole process up and keep diligence short.
Work booked for the next twelve months. An order book, a renewal schedule, a quoted pipeline with win rates: anything that lets a buyer see forward rather than only backwards. The further ahead your revenue is visible, the less of a leap of faith the price has to cover.
Something the buyer can add that you have not. This one is counter-intuitive: unexploited opportunity makes a business more attractive, not less. A second region never opened, a service line never launched, pricing never reviewed. Buyers pay for a running start, and the ones worth selling to will tell you exactly what they would do with it.
None of these require a bigger business. They require an organised one. Most owners can move materially on three or four of the six within a year, and the price moves with them.
Tatu partners with the owners of UK service businesses making £500k to £3m a year in profit: money out today, a meaningful stake kept, and a bigger sale built together. See how it works, try the free valuation estimate, or write to nico@tatu-capital.com.