How you explain the opportunity that your business sale represents can make the difference between getting a good, qualified buyer, or not selling the thing at all. It’s that serious. It’s more than presenting your financials, it’s the story of your business, your mission and what the potential is for the future. You may start and stop with a Word Document, but make sure you have used all the headers, footers, pagination and colors that you can to make the presentation look valuable. Never send it along as a Word doc. Always save off to pdf. A lot harder to edit, and easier to read on varied devices.
Buyers will scrutinize your prospectus, expecting you to have no ethics and to be trying to offload a problem. So, your books need to be immaculate, intricate and with at least THREE years of data. Now if you just changed your Point Of Sale system and you don’t have that level of detail, be prepared to share something else that makes your case… like your tax return and the source documentation for the filing.
Here are some items that have to be included:
- the history and nature of the business the Company is engaged in. Include, also, the overall economic outlook for the industry the Company is in.
- Who Owns the company; how ownership and control are organized.
- The latest financial condition of the Company
- The future earning capability of the Company (though be careful of promising something you can’t possibly know, that might make you liable to misrepresentation)
- Lists of current inventory, including FFE and stock
- The capability of the Company to continue to generate the necessary cash flow to support a purchase.
- The worth and value of the goodwill/intangible assets of the Company (your online footprint counts as part of the goodwill here)
Without specifically saying who they are, you do want to explain how likely are they to stay on when the company changes hands. It maybe be part of the plan for the current owner to personally introduce each of the primary customers to the new owner to ensure a smooth transition.
You may be asked, you may not. It will be during Due Diligence. If it takes you a while to get the paperwork organized, you could raise suspicion or lose a buyer who is looking at more than just your business to buy.
Are you duty bound to disclose that a Home Depot (or some other national chain) is about to open down the road and that your business will be under severe threat? This is just one of many reasons why, when you decide to sell your business, you HAVE to have a business broker on hand to give you the benefit of their advice/experience.
Other items that need to be included:-
FACILITIES, PROPERTY AND LOCATION
REASON FOR SALE
Color and Fonts
Use the colors of your brand to remind readers that this prospectus is from your brand. It also looks more professional. The same with the company fonts. If you don’t have a brand identity kit, it’s worth getting one. They’re doable online, yourself, and you end up looking bigger and more substantial as an enterprise once you have one.
Litigation, Bad Reviews, Etc.
Any buyer worth their salt will find all this out anyway, so why not get your story out in front? If they are old problems that you avhe now solved that says more about you as an ethical seller than if the smudge on your reputation is discovered in Due Diligence.