What is a Selling Memorandum?
A Selling Memorandum:
· Contains vital business information and documentation along with details of the unique features of your business.
· Contains all relevant business information and is provided to potential successors and prospective buyers during preliminary discussions relating to succession of the business.
· Will assist prospective buyers to make an informed decision about the purchase of your business.
Therefore, it is essential that prospective buyers are provided with the most accurate and up-to-date information relating to your business.
A Confidentiality Agreement should also be prepared, and signed by prospective buyers and possible successors, before handing over your Selling Memorandum to them.
Why is a Selling Memorandum important?
· If buyers have a high degree of confidence in the accuracy of the information provided.
· To them, this will be reflected not only in the sale price, but in the entire sale process.
· It is a simple tool, used to demonstrate the uniqueness of your business.
· It contains relevant sale information which will assist in sale discussions.
· It will increase your opportunities for sale.
What is included in a Selling Memorandum?
Some of the information to be included in your Selling Memorandum includes:
· The products or services you provide.
· The history of your business ? Details of your clients.
· Details of employees and employee agreements ? Details of business achievements.
· Company policy documents.
· Business alliance agreements.
· Details of your unique selling points.
· Financial information.
· Business Plan.
· Marketing Plan.
· Licences & Accreditations.
· Register of information available for buyers' due diligence – including financial information and documentation.
One of the key inclusions in your Selling Memorandum is your unique selling points. Your unique selling points are the features that distinguish your business from your competitors.
Some examples of unique selling points could be:
· Your high value client base.
· Your business specialisation.
· Your business culture.
· Your net fees as a % of total income.
· Your level of sustainable income.
You must only include true and accurate information. Provide a copy of your Selling Memorandum to your professional advisers to confirm its' accuracy.
What documentation is required during the sale process?
Set out below is a list of the activities and documents typically required from enquiry to sale:-
Your professional advisers can assist you with completing the above documentation.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Kidmans Partners and Bstar accept no responsibility for any loss suffered as a result of any party using or relying on this article.