Contributing to the Overall Value
The form of the consideration received at the closing of the business sale (stock, cash, combination, etc.), tax treatment, release from personal guarantees, earn-out payments that are related to the achievement of operating forecasts and successful integration of the business with the buyer’s other activities are all integral parts of the overall value of the business sale
Initiating the Business Selling Process
The decision to pursue a sale of your business
should be based on the awareness if the general level of interest that prospective buyer is expected to have for the business, a realistic valuation range and the ability to deliver the goods. Fastidious sellers anticipate hurdles to complete a business sale.
At VR, we urge our clients that are selling their businesses to confirm that their good title and all the essential elements can be transferred to a new owner.
Assembling a Business Marketing Plan
The financial advisor of the seller should absorb information about the business and the current market conditions in order to recommend a marketing plan. Considerations for developing a marketing plan include the complexity of the seller’s business, the number of likely prospects, the degree of screening to qualify interest, timing; level of confidentiality required and other items that are specific to the personalities and pressures of the situation.
You should have in place by the end a clear strategy for how to set up the business sale opportunity
, determine the prospective buyers, deciding who should do the first contact, qualify prospects, exchange information and ideas, site visits and the coordination of negotiations with alternative prospective buyers.
Supplying the Buyer with an Offering Memorandum
There are differing opinions about what information prospective buyers need. An offering document or memorandum that feels like it’s been widely distributed is not going to be in the best interest of the seller. Every situation will differ from another, but buyers believe that they need to analyze the business and reach some conclusions on price and deal structure.