There are many different strategies that will likely be deployed during the sales process. In this article, we’ll focus on how to utilize the Confidential Business Review CBR and/or CIM. Frequently, the Confidential Business Review is also referred to as a Confidential Information Memorandum. But no matter what name is used, the CBR/CIM provides a pathway for obtaining the highest selling price possible.
It is important to understand that the CBR/CIM must be factual at its core. Yet simultaneously, the CBR/CIM can function as a promotional and sales tool. The CBR/CIM can be integrated with an Executive Summary in the document, which allows prospective buyers a way to learn more about the business.
Through the Executive Summary section of the CBR/CIM, prospective buyers can quickly gain insight into the key highlights of a given company. The outline should include key factors, such as an overview of the ownership and management structure as well as a description of both the business and financial highlights. The company’s products and services should also be covered in detail. Importantly, the CBR/CIM should include why the business is for sale and some information about the market.
A well-constructed Executive Summary helps to both guide and motivate a prospective buyer so that they become motivated to learn more and take action. The Executive Summary should grab hold of anyone who reads the high points and illuminate why your business is valuable.
Many variables can be included in the CBR/CIM. Everything from the history of your company and what it does for the markets it serves and the products it creates can all be found in this document. Other topics such as the current state of competition, your key customers, management, your growth strategies, various financial information and other important variables can all be included in a CBR/CIM.
The creation of a coherent and persuasive CBR/CIM, one that motivates a prospective buyer or their representative to take action, is an artform. Much like it is prudent to invest both time and resources to the creation of an excellent confidentiality agreement, the same holds true for the creation of a CBR/CIM.
Business Brokers and M&A Advisors are experts in the creation of key sales documents, such as the CBR/CIM. One of the quickest and easiest ways to create an excellent CBR/CIM is to work with an experienced Business Broker as they understand exactly what should be in an offering memorandum. This document may very well be the first important contact point with a prospective buyer. For this reason, it should be designed to work to your benefit in a variety of ways.
Great deals can quickly be derailed when confidentiality agreements are not properly used and observed. The number of headaches that can occur due to a failure to follow the requirements of a confidentiality agreement are rather extensive. Whether it is employees discovering the potential sale, to the loss of key customers or even alerting a competitor that your business is for sale, there is no end to the headaches that can arise when a confidentiality agreement is not in place or adhered to. Simply stated, adhering to confidentiality is one of the most important aspects of the entire sales process.
Thanks to a well-constructed confidentiality agreement, sellers can enjoy protection from the disclosure of critical and confidential information during the sales process. While confidential agreements may have originated as a way to safeguard against prospective buyers revealing information about a seller’s business, these agreements have evolved to consider numerous seller concerns.
A good confidentiality agreement helps to protect all sorts of important details that may be revealed during the sales process including trade secrets and proprietary information. It can also outline the fact that a prospective buyer will not attempt to hire away key employees.
Considering the importance of a confidentiality agreement, it is well worth the time to create an agreement that covers all key areas. Everything from how confidential information should be shared to how breaches in confidentiality should be remedied must be addressed by a confidentiality agreement. It is not prudent to cut corners to save money and time when drafting a confidentiality agreement, as it is likely one of the most important business documents your business will ever create.
Just as no two businesses are the same, this fact holds true for the content of important legal documents. The sale of every business is a unique situation, and for that reason every confidentiality agreement must be tailored to fit the precise circumstances of the business.
Business brokers and M&A advisors are experts in the buying and selling of businesses. Part of that expertise extends to the creation and execution of confidentiality agreements, which are also sometimes referred to as non-disclosure agreements.
At the end of the day, the last thing any business owner wants is for key information regarding their business to be revealed. Working closely with a brokerage professional is an important way for sellers to safeguard their confidentiality throughout the process.
For most entrepreneurs, finding the money to launch their first business stands as a tremendous challenge. The good news is that getting a loan through the Small Business Association (SBA) is turning out to be a viable option for many business owners.
The SBA doesn’t directly provide loans itself, but instead, works to facilitate lending. SBA assistance can even extend into the realm of micro-lending. It is very important for prospective buyers to realize that since SBA loans are government backed, lenders are typically much more willing to offer a prospective buyer a loan. Impressively, the SBA will cover seventy-five percent of a lender’s loss in the event that a loan ultimately goes into default.
Many entrepreneurs find the issue of collateral to be a challenging one. Once again, the SBA can be of assistance. In some cases, an SBA loan may bypass the need for collateral altogether.
Overall, SBA loans do in fact have a good deal in common with other types of loans. Prospective buyers should have all of their financial documentation ready and well organized. In short, prospective buyers should have all their information organized as they would when dealing with a bank without SBA involvement.
Not every prospective buyer will qualify, so the first step that should be taken is for a would-be business owner to check and verify that they do indeed qualify for a loan. The next step for a prospective buyer is to find a lender and complete all necessary SBA forms.
There are several factors that determine eligibility for an SBA loan. Here are the two top factors that are important for qualifying for a loan
- The business must be based in the United States, the business must be a for-profit venture.
- Prospective buyers should expect that their application will take two to three months to process once it has been submitted.
All too often, people assume that they simply won’t qualify for an SBA loan. The statistical data tells a different story. Every year, thousands of people are approved for SBA loans. It’s important to keep in mind that these loans are not just for those looking to buy a business. The SBA also helps existing businesses that are looking to expand.
For the end of 2023, the SBA Administrator Isabel Casillas Guzman announced that this year, the SBA delivered $50 billion and this included capital, disaster relief and small business support. Guzman stated, “The Biden-Harris Administration remains committed to simplifying and addressing persistent inequities in accessing capital to ensure all small business owners can get the funding needed to grow and create jobs for our economy. In Fiscal Year 2023, the SBA transformed its lending and investment programs and expanded its capital partners to deliver nearly $50 billion in startup, growth, and recovery capital, as well as surety bonds, including more small business lending to people of color, women, and veterans.” 
Business brokers and M&A advisors are experts in working with the SBA. Entrepreneurs looking to buy a business can benefit enormously from their years of SBA experience. Working with a business broker or M&A advisor can help you streamline the SBA process and dramatically increase your chances of success.
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In the day-to-day routine of running your business, it is easy to forget that eventually the day will come when you need to sell. The last thing that any business owner wishes to discover is that they are ready to exit, but they are hopelessly underprepared. One of the key ways to prevent this from happening is to prepare for the sale of your business as far in the future as possible.
1. Always Look Ahead to the Future
Many experts consider not having an exit strategy to be a risky endeavor.
So, what are some of the most important steps that business owners need in preparation for selling their business? The first step is thinking about your exit strategy on the day you found your company.
If you build your business while keeping an eye on the fact that you will one day be seeking to be acquired, then you will adjust your plans and strategies accordingly. All of this means understanding the market and knowing exactly what prospective buyers want from a business. In other words, the sale of your business should be built into its very foundation.
2. Think About Prospective Buyers
There are a variety of reasons why acquisitions occur. For example, sometimes it is an entrepreneur looking for opportunities, and sometimes it is a business in the same industry that is looking to expand. The more you can learn about the motivating factors that cause individuals and entities to buy businesses, the better positioned you will be.
3. Constantly Network
Another good idea is to constantly network and make connections. The more people you know, the better off you will be. You may be running and developing your business for decades. During this time, get to know as many people in the industry as possible.
While it may be necessary to modify the exit strategy in the future, having one in place serves to create an invaluable framework for when the time comes to sell. A savvy business owner will have a well thought out exit strategy in place at the very beginning.
When you work with a business broker or M&A advisor, you will also benefit from their professional connections and years of networking with buyers. Selling a business is all about preparation, making connections, and finding the right advisors and partners.
The post How Can You Find the Ideal Buyer for Your Business? appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Deciding how the purchase of a business should be structured is no small task. If you are planning to help finance the sale of your business, you’ll want to tackle this issue very early in the sale process. When it comes to small business sales, a high percentage of deals include some seller financing. Here are some of the most important things you’ll want to think about beforehand.
The simple fact is that interest rates cannot be overlooked. In an era where interest rates continue to climb, the future rates are far from certain. That’s why it is critically important to factor in interest rates to your buying decision. In the event that you find a buyer, you’ll need to decide what is the acceptable interest rate for a seller financed sale.
The Buyer and Debt
It is also quite important to know whether or not a buyer will assume any long-term debt or secured debt. Early in the process, you’ll want to address this topic and come to a conclusion regarding the optimal path forward. If there are favorable terms, this usually means a higher sales price.
There will, of course, be tax implications to the sale. It is only prudent to work well in advance with a tax professional, to understand every tax implication. You should gain an understanding of how the taxes will work long before a sale takes place. You’ll also want to talk to an experienced attorney to understand the legal implications of seller financing.
Without a doubt, there will be tax implications that affect your sale. That’s why you’ll need to understand what those implications are and what it will mean for you.
Just as taxes can throw a curveball into the mix, this fact holds true for additional costs. You’ll want to consider if there are any unsecured creditors that still need to be paid in full. Closing costs are another commonly overlooked issue. It is prudent to determine whether or not the seller plans on paying for part of the closing costs. Closing costs, just like taxes, can be sizable and should not be overlooked.
Knowing Your Lowest Price
Before walking into any negotiation, you need to know what is your lowest price. It can take months or even years for a business to sell. You need to know what your lowest price is for when the day comes that an offer is made.
Working with a business broker or M&A advisor is a savvy way to address all of these issues well in advance. There are many factors that go into the sale of a business and having an experienced professional by your side is simply invaluable.