Need funding or want to sell your business? This is what investors look for

Heidy Rehman
Jul 16
3 min read

Almost all businesses, at some stage, will require funding. Many owners will also have ambitions to sell their company sometime down the line.

If that's you, we'd recommend you start planning as early as possible.

There's a lot that goes into preparing for a sale or a finance raising round which can't be covered in a single blog post. However, we thought it would be useful to provide a good basis for what buyers of and investors in businesses look for.

This is just some of what they'll consider before making an offer:

A viable product or service and competitive advantage: They will want to know you have a good value proposition that resonates with your customers in a unique way from that of your competitors.
Industry trends and market conditions: Your business will need to be positioned favourably within an attractive market.
Strong cash flow and profitability: Consistent revenue and healthy profit margins that convert to cash.
Recurring revenue streams: For example, subscription models, contracts and/or repeat customers. This makes future revenue assumptions more reliable.
Growth potential: Whether your business has scaleability, opportunities for expansion and good market demand.
Efficient operations: You'll need to be able to demonstrate you have well-documented processes and policies that are followed properly.
Solid financials and clean books: No investor wants to deal with messy or opaque financial records as this increases the risk of problems and potential regulatory or tax non-compliance.
Reliable team and management: A check on whether you have the right employees and leaders to achieve your strategic goals.
Minimal owner dependency: Investors will be keen to know if your business can operate without reliance on the founder /owner. They will also want to know if there's any particular reliance on other members of staff.

If you have meetings lined up with prospective investors, it's always good to prepare. Here are some examples of questions they may ask so you can have your answers ready:

Describe your competitive landscape and what makes your business stand out.
What are your key revenue drivers?
What is your customer retention rate?
Explain your growth and expansion potential.
Are there any upcoming changes in the market that could affect your business?
What are your historical and projected revenues and profits, say for 3-5 years and what are your future assumptions based on?
How much will you need to invest in the business to achieve your growth targets and how do you plan to finance those investments?
Are there seasonal revenue fluctuations and, if so, how does your business handle them?
What is your customer acquisition cost (CAC) and/or customer lifetime value (LTV)?
Are there recurring or contractual obligations and does your company generate enough cash to cover them?
What are your key operational processes and are they documented?
What are your biggest operational inefficiencies or bottlenecks?
Do you have supply chain risk (e.g. reliance on one key supplier)?
What technology or software do you use? What manual processes do you rely on?
Are all business licences and regulations up to date?
Are there any legal issues, pending lawsuits or liabilities?
Are trademark, copyright, data and intellectual property protections in place?

These are just some of the types of questions investors may ask to assess your company's potential — and this is before they even think of placing a value on it. Investors will always be thorough and will expect clear, concise answers. So we can't emphasise enough how important it is to plan from day one.

Knowing that your company is on track for success can be a really boost for confidence as you embark on business investment rounds. Here's how you can put the right KPIs and management reporting system in place to keep you focused.

If you need help getting ready for an investor pitch or just to know where to start, we'd be happy to help.