Is Your Business Truly Sellable?

Selling a business can be an exciting milestone, but not every company is ready for a smooth sale. Before you put up the “For Sale” sign, it’s important to check both intangible and financial indicators of sellability. In this guide, we break down the key non-financial drivers and measurable metrics that buyers look at when evaluating a business. By understanding these factors, you’ll be better prepared to fix gaps and confidently approach the market.

Non-Financial Value Drivers

These factors can be harder to measure but have a big impact on how buyers view your business. Consider the following questions:

• Automated sales pipeline - Do you have systems (like a CRM) that automatically capture leads, track deals, and follow up with prospects? A business with an automated sales pipeline shows buyers it can grow “with or without the founder,” thereby increasing its value. If all your sales come from personal contacts or memory, that dependency may scare buyers away.
• Owner dependence - Is your business overly reliant on you as the owner? If “the business is heavily dependent on you for its day-to-day operation,” buyers will see it as a risk, which can “reduce its value and limit the number of potential buyers”. To address this, delegate key roles and document processes so the company can run smoothly even if you step back.
• Intellectual property (IP) - Who owns the ideas, branding, or tech behind your products? Any IP your business owns (patents, trademarks, unique software, trade secrets, etc.) can be an enormous value-add. For example, a strong brand or patented process gives a buyer confidence in future profits. If IP is not clearly owned or properly registered, it introduces risk and could lower your sale price.
• Governance and compliance - Does your company have clear rules, policies, and oversight? Sound corporate governance with defined roles, regular financial reporting, and compliance procedures builds trust and investor confidence. Lack of governance can complicate due diligence and scare off buyers, so be sure your “own rules” are in place before selling.
• Company culture - What is your company culture like, and can it scale? Buyers value businesses with a positive, cohesive culture that aligns with the company’s values. A healthy culture retains employees and attracts customers, which supports growth. If culture is overly founder-driven or toxic, buyers will worry about employee morale and retention.

Measurable Financial Metrics

Potential buyers also scrutinize the hard numbers. Below are six core metrics they’ll examine:

• Net profit - This “bottom line” shows profit after all expenses. Net profit tells you what’s left from revenue after paying costs, taxes, salaries, etc. Example: If your revenue is ₦50,000,000 and total expenses are ₦30,000,000, then Net Profit = ₦50,000,000 – ₦30,000,000 = ₦20,000,000. A strong net profit (and profit margin) signals a healthy business.
• Asset turnover - This ratio measures efficiency – how well your business uses its assets to generate sales. It’s calculated as total revenue ÷ average total assets (with assets averaged over the period). A higher ratio means you’re getting more sales for each ₦ of assets. Example: Suppose revenue is ₦80,000,000 and average assets are ₦40,000,000. Then Asset Turnover = 80,000,000 ÷ 40,000,000 = 2.0, meaning ₦2 in sales for every ₦1 of assets.
• Annual Contract Value (ACV) - Key for subscription or contract-based businesses, ACV is the average annual revenue per customer contract. Calculate ACV = total contract value ÷ contract term (years). Example: A 3-year consulting contract worth ₦3,000,000 in total gives ACV = 3,000,000 ÷ 3 = ₦1,000,000 per year. Knowing your ACV helps buyers forecast reliable revenue.
• Average Revenue per Customer (ARPC) - This shows how much each customer spends on average. It’s simply Total Revenue ÷ Number of Customers. Example: If annual revenue is ₦36,000,000 and you have 360 customers, then ARPC = 36,000,000 ÷ 360 = ₦100,000 per customer per year. A higher ARPC means customers are more valuable; consider upsells or premium services to raise it.
• Customer Lifetime Value (CLV) - CLV estimates total revenue one customer brings over their entire relationship. A basic formula is CLV = (Avg. purchase value) × (purchases per year) × (customer lifespan in years). Example: If the average purchase is ₦5,000, customers buy 10 times a year, and stay for 3 years, then CLV = 5,000 × 10 × 3 = ₦150,000. A high CLV (compared to acquisition cost) shows you’re earning strong long-term value from customers.
• Other relevant metrics - Buyers may also look at metrics like recurring revenue (e.g. monthly recurring revenue, MRR), revenue growth rate, churn rate, and return on investment. For example, steady month-over-month revenue growth or high customer retention will make your business more attractive. Use industry benchmarks to see how you stack up, and be ready to explain any big gaps.

Summary

A truly sellable business combines strong soft assets with solid financials. Make sure your operations can run without you, protect and own key assets like IP, and build a positive culture - all while demonstrating profitability and efficiency through the metrics above. Before you list your business for sale, use this article’s criteria as a checklist. Addressing any weak spots early will help maximize your valuation and attract the right buyers when you’re ready to sell.