Business Brokers NJ: Article About The Importance Of A Selling Memorandum
When you sign a listing agreement with a qualified merger and acquisitions specialist, one of the first services your agent may provide is preparing a selling memorandum. In an industry where smaller businesses are not always treated on an equal basis with larger corporations, only a few premium merger and acquisitions specialists provide this customized report. Check with your business brokers NJ to confirm that a selling memorandum is part of your listing package.
A detailed, professionally compiled selling memorandum helps your business attract market interest. Buyers have the luxury of choosing among several businesses that meet their criteria, and a clear, concise memorandum detailing all of the advantages offered by your company makes it stand out among the competition. Also, because buyers cannot afford to fund in-depth analyses of every business that catches their interest, those sellers who provide a professionally prepared selling memorandum are the ones that purchasers are more likely to seriously consider.
Your document presents specific details regarding your financial health, your products and services, your clientele, your market niche and your competition. It describes your staffing structure and summarizes your reasons for selling. The selling memorandum also describes your exit strategy and your asking price for the business.
Have a question regarding business exit planning or business sales? Please ask the business brokers from Selby Associates of Cherry Hill NJ today.
The primary purpose of the selling memorandum, which your agent may also refer to as an offering memorandum or "the book," is to entice prospective purchasers to take notice of your company. A secondary purpose may be to clarify your own perspective of your company's market value. Sellers frequently overestimate the value of their businesses because they know the extent of their personal investment. Looking at the details in a clear, unvarnished format enables you be more realistic in your expectations.
If properly compiled, your selling memorandum acts as a strong marketing tool for your business sale. The key is to highlight the positives of your company and present negatives as opportunities for the right buyer. An effective document will attract qualified buyers and garner a top selling price.
However, your agent will not make a full disclosure in the selling memorandum. Sensitive information is best reserved for the time when a purchase offer is in hand and due diligence is under way. Revealing confidential items and trade secrets or making a complete financial disclosure are inappropriate and may actually put your company value at risk.
Your selling memorandum should specify exactly what is included with your business offering to avoid later misunderstandings. It should be directed at an appropriate audience, and it should also be well organized and easy to read. Be sure to select a business broker who has the experience and ability to create a selling memorandum that sells your business as effectively as possible.