Exiting your business: The information memorandum
If a prospective buyer is interested, they will need to find out more about your business before they can make an offer. Great care needs to be taken to ensure that commercially sensitive information does not find its way into the wrong hands, particularly a competitor. You might want to exclude from the process altogether anyone that you consider represents a particular threat to your business. Before you disclose any commercially sensitive information we would always recommend that you obtain a signed confidentiality letter. First impressions are very important; information about your business needs to be presented to prospective buyers in such a way that they will interested in, and appreciate the value of, your business. We recommend that a sales memorandum is prepared. This is a substantial document, describing your business: the goods or services you sell, your customers, your suppliers, your competitors, the markets in which you operate, your premises, your intellectual property and other assets, your management, your financial history, and your plans and forecasts. A good sales memorandum should:
- emphasise the areas that are likely to be of most interest to the prospective buyer
- highlight those points that may increase the value of the business
- not be overly long
- include an executive summary setting out the main features of the document and describing the intended sale process
The actual process of preparing the sale memorandum is extremely valuable. It brings a spotlight to bear on all aspects of the business being sold, enabling you to show strengths in the best possible light and providing an opportunity to identify and correct weaknesses before they are revealed by the buyer’s due diligence.
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Within Within Selling your business… Within Exiting your business… General...
