7 Steps On How To Write An Eye Catching Selling Memorandum
By JoAnn Lombardi, PresidentVR Business Brokers/Mergers & Acquisitions
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Prepare a Selling Memorandum when marketing a business to sell. The selling memorandum is a written summary which outlines the selling features of the business, highlighting those points which would be of interest to a prospective purchaser. The package acts very much like a brochure on the business. It provides the starting place for discussions and it is the “take away” piece that a buyer can take home after be thoroughly qualified and executing the non-disclosure agreement. By preparing an elegantly written and informative selling memorandum of the business, we not only have an excellent selling tool, but we have also demonstrated our professionalism both to prospective buyers and to the seller of the business. A well-prepared selling memorandum does not sell the business on its’ own, but it certainly makes a powerful contribution.
Since every business is different, each selling memorandum that is prepared is unique, although all have common elements. The memorandum may be either short or long and varies typically by the size of the business that is being marketed. A small company (i.e. under $500,000 selling price) will usually have a selling memorandum no more than 6 to 8 pages in length. A larger company above the $500,000 range may have a 20 - 30 page memorandum prepared. Companies above $2 million usually will be packaged with a longer report that may be in excess of 35 to 50 pages. Obviously, this also varies with the complexity of the company and the industry.
Every selling memorandum should cover the following elements:
1. History of the business
2. Description of the premises, or physical plant
3. Description of the product or service
4. Description of marketing efforts
5. Prospects for the company
6. Summary of pertinent financial data
7. Copies of company brochures, menus, product lists, etc.
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Networking Your Way to Success
Whether you are seeking to buy or sell a business, networking can be an invaluable resource to gain both perspective and information. The overall importance of not “being an island,” but rather being actively involved in both your local business community and local area community is imperative to be sure that people know that your business exists and understand your business benefits and value.
Become an Ambassador of Your Business -- Online
Being a visible source of information, advice, helpful tips, etc. gets you noticed in a good way. You want to be perceived as an experienced expert in your field. Each day and multiple times throughout the day be involved in online communities. It may take a bit of trial and error to find the most responsive outlets but once you realize where the majority of new leads are emanating from, frequent those few online venues so that your networking does not eat up your day.
Search out groups in places such as LinkedIn, Facebook, Twitter, Instagram, TikTok, Pinterest, local chambers, and local community groups. Many groups have both in-person as well as online opportunities to network. When you post a question or a tip be a moderator of your posting. Don’t just post it and abandon it. Answer any comments, post-follow-up tips, or other questions and keep the conversation going.
Actively invite customers and associates to write testimonials on your social media. You will be surprised how willing people are to post reviews and recommendations if you just ask for them. Take pictures and videos of yourself at events, business functions, meetings, training, etc., and post them on your social media and your website. Show that you are “out there” and involved.
Contact your local newspapers, trade associations, and any local blogs. Ask to write informative (not promotional) articles related to your business category.
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Helpful Tips to Get Your Deal Closed Fast
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- Buyers Personal Credit Score - if under 700, this could present a problem; obtain a thorough credit explanation letter.
- If LeasedLlocation - the lease term must cover the loan term. Obtain landlord consent agreement early in the process.
- Buyers Relevant Management Experience - is a MUST.
- If a key manager running the business is a non-owner buyer (buyers need an SBA 1919 form completed by a manager).
- Verify equity on day one!
- No funky add-backs - no creative accounting.
- Include a complete equipment list and include serial numbers on all items of $5,000 or more.
- Get the 4506T form signed by the seller on day one!
If the loan is not fully secured, life insurance will be needed - start early!
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Start Your Exit Planning Today (Part 1)
By Ryan Jordan, Owner of VR Business Brokers Office in Calgary, Canada
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As a business broker for more than 10 years now, I have only met a handful of businesses valued less than $1M that have an actual exit plan in place, written down, and currently being acted upon as part of a planned departure from their business.
The vast majority of clients in the $250,000 to $1M value range come to us with little to no plan, and are simply not ready yet for the process of listing and engaging with serious buyers. The owners in this range often have a far more active role in the day-to-day operations in the business and are likely more focused on their daily role than actively preparing their business for a future without them.
As a result, these business owners often wait until they’re burning out, or life has thrown them a curveball, and then they have quite a bit of work to do in order to prepare themselves and their business for sale. They’re losing value, time, and health by not having a plan.
Having an exit plan in place makes it a lot easier for their trusted broker to achieve the sale because we can’t get to the goal if we don’t know what it is. Those with active plans have worked on eliminating barriers to sale, they’ve added management, they’ve created documentation, improved upon systems and processes and they’re already mentally prepared for the next step of engaging with a broker and shifting to another focus in life. They’ve also worked with their accountant to prepare their personal finances for the most tax-efficient absorption of the proceeds of the sale.
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Is Business Travel Back? Survey Says
Gone are the days of carte blanche access to our peers’ calendars. Twelve months ago, we were able to reach out last minute to schedule a meeting or invite someone to an event. Scheduling conflicts were basically non-existent. Today, however, travel is back, deal activity is booming, and the lower middle market is clamoring to meet face-to-face.
Beginning around this time last summer, Axial began polling its (virtual) event attendees to gauge when in-person events could make a comeback. We penned a couple of different articles (first in July and again in November) with thoughts and predictions on in-person business development opportunities. Now, as we emerge from the nationwide lockdown and continue down the path towards normalcy, we’re taking a look back at the data to see just how off/on point we were.
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2 Custom Built Residential Care Homes for Sale in MN
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These beautiful multiple homes are purpose built for Assisted Living program. They have total of 10 suites and licensed for up to 20 residents. The business has been in operation for over a decade with good reputation and owners take a great pride in quality care. The owners are looking to sell the business due to personal reasons and other business interests. This project is heavier in real estate asset value. Real Estate included.
?For more information contact: Young Bebus at youngb@vrtwincities.com.
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VR Located in New Haven, CT Sold a Hardware Manufacturer Company
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This business manufactures hardware of its own design and brand that serves both the marine and architectural markets. The company was founded over 70 years ago and in the last 15 years has gone through a strong period of growth in revenue and earnings after it focused on core products and invested in the equipment necessary to achieve this. Their sales did not suffer from the pandemic and had higher revenues in 2020 over 2019.
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Thinking of selling your business or looking for an established
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VR is The Only Remaining Founding Firm of The International Business Brokers Association ("IBBA").
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Have You Ever Considered Selling Businesses?
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