A solid, factual and compelling offering memorandum maximizes the chances of not only selling a business, but obtaining the highest possible price. An offering memorandum is also referred to as the selling memorandum, a confidential descriptive memorandum, or simply as “the book.” The memorandum, regardless of the terminology used, must be as factual as possible, but the Executive Summary...Read More
Important questions to ask when looking at a business…or preparing to have your business looked at by prospective buyers.
• What’s for sale? What’s not for sale? Does it include real estate? Are some of the machines leased instead of owned?
• What assets are not earning money? Perhaps these assets should be sold off.
• What is proprietary? Formulations, patents, software, etc.?
• What...Read More
A January 2004 survey conducted by the DAK Group/Rutgers found the following breakdown of why businesses are for sale:
Reasons To Sell
Risk reduction 44%
Competition or market changes 41%
External pressures 27%
Lifestyle factors (age, health, etc.) 14%
Lack of capital 9%
Ownership/management issues 07%
Note: Multiple responses allowed; Source: DAK Group/Rutgers
It is...Read More
The closing is the formal transfer of a business. It usually also represents the successful culmination of many months of hard work, extensive negotiations, lots of give and take, and ultimately a satisfactory meeting of the minds. The document governing the closing is the Purchase and Sale Agreement. It generally covers the following:
• A description of the transaction – Is it a stock or...Read More
Another important factor relating to the asking price is the amount of cash involved in the sale. There is an old saying that the higher the full-price, the lower the down payment – and vice-versa. The sale of almost any business involves some seller financing. The smaller the down payment, the higher likelihood of a quick sale. No seller wants to take back his or her business because...Read More