Developing a marketing package that tells your story
Do you have all required documents that market the story of your business? Having a marketing package will ultimately shorten sell time and award the highest sales price. Without documentation, a buyer cannot make an informed decision about a purchase. In preparing for the sale of your business, below is a list you can use to develop a winning marketing package.
- Interim financial statements
Interim financials show a buyer the up-to-date financial strength of a company since the last corporate year tax return filing. Interim financials are also necessary for lending institutions when trying to obtain financing.
- Three years of tax returns and income statements
Three years of financial statements paint a picture for the buyer, on the financial stability of a company. A prospective buyer can use financial statements to analyze revenue and expense trends, determining the health and cyclical trends of the business.
- Current asset list
When assets are a significant part of the equity, a higher sales price is easily justified. Anything above asset value is considered goodwill and is more difficult to justify. An asset list with total fair market values creates a base value for a business. If outside financing is needed for a business transfer, then an itemized list may be required.
- Asset and Liabilities
Assets and liabilities on a balance sheet can either be transferred with the sale or kept by the seller. A buyer needs to know exactly what assets and liabilities are an educated offer. It is prudent for a seller to identify which leases and notes can be transferred before the negotiating process begins. Not taking this action could cause a deal to collapse.
- Facility information
It is necessary for the prospective buyer to know everything about the facility being purchased. Things to know are:
- Where is it located?
- What are the lease terms?
- Is real estate included in the deal?
- What is the square footage?
If the business is in a leased facility, it is imperative that a buyer performs due diligence to determine whether the lease terms can be transferred. Awareness of these factors can give the buyer a stronger negotiating position.
- Employee information
The most valuable asset in addition to FF& E (Furniture, Fixtures and Equipment) are the employees. The following information should be included in the marketing package:
- Number of employees
- How long each employee has worked for the company?
- What is the current pay structure?
- How stable is the workforce?
- Do the employees know the business is for sale?
- Is the owner willing to stay on as an employee?
Employee information, without personal identifying information can be displayed using an organizational chart.
- Company history
A chronological summary of a business will provide a prospective buyer a road map to a company’s history. A prospective buyer will be able to look at historic financial statements together with the company’s business history to perform an overall analysis. Information to know:
- Has a new line been recently added?
- Has the business been moved?
- When was this business formed?
- Is the business run by the original owner?
- What has been the marketing program since the company’s beginning?
- Other information to include:
- Reasonable and fair Asking Price
- Deal Structure and Financing
- Is there SBA financing available?
- Marketing Strategies –Will aggressive marketing increase sales?
- Reason for selling? – Retirement, divorce or lack of interest?
- Industry Trends – How are industry revenues trending as a whole?
- Industry Trade Journal – if a buyer lacks industry experience, trade journals are recommended.
- Published articles – Has the business been featured in a newspaper article, or trade article?