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 A prospective buyer will
be looking for some very
basic information about
your company. Some
advanced preparation
will not only be
convenient but it will
boost the buyer’s
confidence level.
Scrambling around
looking for records at
the last minute or
giving incomplete
information is not a
good first impression.
We have a very handy
package we refer to as
our "Business
Information Check List".
This packet will help us
evaluate your business
and it will help you
also understand what
kind of information a
buyer is going to want
to see. This packet is
designed to let us
quickly size up your
company and get a
general idea of it's
potential sale price. Of
course any information
you supply to use will
kept strictly
confidential and will
not be given to anyone
without your
permission.
The buyer’s confidence
level increases when the
seller is professional
and can answer the
important questions.
Gathering and preparing
the following
information will be
helpful in explaining
your company to a buyer
and justifying your
asking price.
These are some of the
topics covered in the
packet. We've included
them here to give you a
general idea of what
information may be
required.
WHY ARE YOU SELLING THE
BUSINESS?
This is one of the first
questions the buyer
asks. In other words “If
this is such a great
opportunity, why are you
selling it?”
Retirement, relocating,
illness, divorce etc are
all reasons a buyer can
easily understand. “I’m
bored with it”, “It’s
time for me to move on”
these types of reasons
make sense to an
experienced business
person. If this is your
buyer’s first business,
these reasons may be a
deal killer.
Your answer should be
truthful and sincere. If
you are having financial
difficulties, are being
sued etc., these things
need to be disclosed.
Any sale contract will
address these types of
issues and if you are
concealing any problems
you may generate serious
liability for yourself.
A lot of negative issues
are not necessarily deal
killers, but usually
have a negative effect
on price. It is best to
be up front with all
pertinent information.
Remember "it is what it
is".
WHO OWNS THE BUSINESS?
Is your company a Sole
Proprietorship,
partnership, LC, C Corp,
S Corp, Non Profit or
some other type of
entity? Do you want to
sell the stock or the
assets? Do all
individuals who have the
authority to make a
decision to sell your
company agree to sell?
This would be a
question for your lawyer
if you are not sure.
This is very important
information. Do not
assume that your partner
wants to sell. RealNova
must know who all the
owners are before we
will accept a listing.
FINANCIAL
The following
information should be
collected and be readily
available for the
buyer’s inspection.
1- The previous 3
complete years
financials,
including present year
to date. It is always
best if these figures
are prepared by or at
least reviewed by a CPA.
In some cases buyers may
request audited
financials. Your CPA can
help you with that
requirement.
2- A detailed summary
of owners benefit.
In other words how much
money does the owner (s)
take out of the company.
Another way to approach
it is to ask what
expenses will stop when
I sell the company.
3- A complete asset
inventory. Desks,
computers, tools,
machinery, vehicles,
special licenses, all
assets that will be
staying with the
company. It is a good
idea to list the assets
you will be taking. For
example the oak office
desk that was a fathers
day present. Make it
clear what assets you
are selling and not
selling.
An asset list may
include a long term
contract or a franchise
agreement you have that
the buyer will be
“inheriting”. In this
case the buyer needs to
be sure that the sale of
the business from you to
him will not interrupt
that contract. You may
own a process, patent or
copy right. These need
to be listed and valued
as well
4- A complete and
detailed inventory list.
This is a living and
changing document as
while the negotiations
for a sale are going on
you are still doing
business and inventory
is changing on a daily
basis. It is important
to keep these records.
The buyer may ask to
monitor inventory levels
after a deal has been
made and we are waiting
to close. Often a seller
may start ordering less
inventory in
anticipation of the
sale.
5- The premises lease.
Do not assume that your
present landlord will
lease the premises to
the buyer at the same
rate that he is leasing
it to you. It is best to
clear this matter up
early in the process, in
writing!!
If you own the building
and are selling the
business only and
leasing the building
back to the buyer, the
terms of this agreement
need to be in writing
early in the negotiation
process.
6- Equipment leases.
Are you leasing
vehicles, pizza ovens,
machinery etc? These
need to be addressed.
The lessor may agree to
allow the buyer to
assume the lease. Be
sure you understand what
liability if any you
still have under the
terms of an assumed
lease. The lessor may
not allow leases to be
assumed so they may have
to paid off. It is best
to have the payoff
figures and understand
the terms of your
equipment leases before
hand.
7- Your Market
Potential. A buyer
likes to hear
information about the
“potential for growth.”
Real hard facts are
helpful. Projected
population growth, “they
are building a 10 story
office building across
from my sandwich shop”
these are positive and
helpful.
When you get excited
about potential you are
basically saying “…this
might happen and you
might make a lot of
money”. A savvy buyer
will want to know your
thoughts on potential
but typically it does
not affect the price.
Previous, real,
verifiable numbers will
have the most effect on
your sale price.
You must help us sell
your company
Selling your business
cannot be a “back
burner” activity. The
broker and the seller
both have to be
proactive in order to
complete the sale.
The broker’s task is to
bring qualified buyers
to the table and the
seller’s task is to
produce records and
information in a timely
fashion. I recommend
that the above
information and
questions be answered
and addressed beforehand
and that the records be
easily accessible to a
qualified buyer and be
kept current.
Also, it is important
that you be accessible,
so that should a
question arise we can
get a quick answer to
that buyer. Everyone’s
time is valuable, but if
you want to sell your
business it will require
an investment in time.
Why should I sell now,
business is so good!!!!
That is a very good
question. The answer is
because you get the best
price when business is
good. Do you want to
wait until you have a
bad year and try to
sell?
Solid businesses with
good solid financials
are selling!!!!. Lets
talk
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