Templates and Checklists


Sales Memorandum Template



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A Sales Memorandum is used by sellers to provide important information about their business and its key values to prospective buyers. In most cases, copies of the Sales Memorandum are only given to prospective buyers if they agree to sign a Non-Disclosure Agreement (NDA) first.

Use the template below as a checklist for covering the main points. Keep each point concise, perhaps using short bullet-pointed text. You can make it easier and more attractive to read if you include financial sheet summaries, financial charts, and images of your business. However, keep in mind that the real details are provided later at the due diligence stage. If done well, the Sales Memorandum can help give you advance warning of additional information that is needed before the due diligence.

Below are some additional resources provided by ExitAdviser (this website), your online DIY platform for selling a business.

Non-Disclosure Agreement Template

Due Diligence Checklist

Sample Business-for-Sale Presentation (PowerPoint)

Online Sales Memorandum Tool


Sales Memorandum

Your Business Name

Insert your logo or branding image here (optional)

Proprietor's name(s)

Insert the owner(s) names and their percentage share.

Contact details

Insert your business address, email address, and phone number.


Summary

Business Main Location

Describe where your business operates (e.g. offices, service locations).

Company website (if any)

What the Business Does

Briefly describe the main purpose of your business and the sector in which it operates. Write this as an executive summary that you could use on other platforms. For example, you could use it when listing your business for sale on a public marketplace.

Category

Write the category of your business (e.g. carpet cleaning). If your business operates in more than one category, list the top 3 to 4 categories and order them by importance.

Year Established and History

When the business was established, where, and by whom. Give the main historical facts and/or key events during the business's history.

Why the Business is An Attractive Proposition to a Buyer

It’s important here to be persuasive. You must highlight the positive reasons as to why a buyer would want to purchase your business. Do this by describing its strengths, key values, and potential for future growth.

Reason for Selling

Your reason for selling; make is short. Be careful not to appear too desperate to sell. Avoid any mention of negative reasons for selling-up and moving on.

Independency on the Present Owner

This is where you declare that your business is already well prepared to continue without your personal and unique presence. A prospective buyer wants to assume that the key information and customer/supplier relations are well documented and professionally handled by the company's staff.

Brief Business Highlights

Product or Service

Briefly describe your main product(s) and/or service(s).

Customer Profile

Do you sell to businesses or consumers (or both)? Briefly describe the typical profile of a customer that would purchase your products or services.

Sales Channels Used

Briefly explain the sales channel(s) where your targeted customers can purchase your products or services, whether this is a shop, restaurant, website, distributor, or some other sales method(s).

Key Market Facts

Include key market facts; prioritizing market size, trend direction, and market share. This is important information for a buyer, so do your research and reference any relevant reports which support it. Enter the total market size in units or value, ideally both. After that, indicate whether the market is growing, declining, or staying pretty much the same. Finally, enter your current percentage of the market share.

Main Promotional Methods

Outline the main promotional activity that is used to build awareness and interest in your offers and brand, such as advertising, social media, personal selling, or other methods of marketing.

The Value Proposition

Why are customers buying your products or services? What motivates them to select your offer above the competing ones? Is it uniqueness, pricing, location, quality, service, etc.? In other words, try to summarize your "value proposition".

The Main Advantage(s) Over Nearest Competitors

Businesses that survive and make sustainable profits have found a formula for adding value to customers. This formula involves companies making their offer distinctive from the competition. Briefly describe your main advantages as compared to competing rivals. Name and shortly describe 1 to 3 of your nearest competitors on the marketplace.

Key Financial Facts and Forecast

Business financial strength is of vital concern to potential buyers. Describe your company's financial position by providing facts about past performance, and where it's heading next (forecast income statement for the next 3 to 5 years). Shortly describe your business's debt vs equity position.

Staffing

Describe your staffing situation and policy. Note particularly if you’re a significant user of subcontracted labor. Enter the number of full-time and part-time employees in your company.

Number of employees that are full-time: 7

Number of employees that are part-time: 2

Price and Terms

Asking Price

Type your asking price or price range.

Add further comments (if any) on the asking price.

Owner Financing

Owner financing is a solution where instead of getting the funding from a bank or other finance provider, the buyer borrows all or part of the sale price from you - the seller.

Owner financing is available / not available

Add any details/terms about your owner financing option (if any). These details/terms could include the loan amount or percentage of the purchase price, term length in years, interest rate, and repayment schedule (monthly, quarterly, yearly).

The Transition of Business Ownership

What plans do you have in place to ensure a smooth transition of business ownership? Measures might include training, a stated post-sale time commitment for hand-over completion, or even a willingness to stay on in the business for an agreed period.

Required Buyer Qualifications

In considering a prospective buyer, what are the minimum qualifications they need to have, if any? Clearly state the buyer criteria here that is acceptable to you, such as prior experience and available finances. This can help significantly reduce applications submitted by time-wasters.

Type of Business Sale

What type of business sale is it? It’s best here to clearly state your preference, whether you prefer an asset sale, transfer of membership, or a shares/stock transaction, without going into any detail at this stage.

Terms of Sale

What terms of sale are acceptable to you? Here’s a chance to lay-out your minimum acceptable terms for a deal (if any). This helps set buyer expectations at an early stage, perhaps scaring off the less serious.

Future Developments

The Main Business Opportunities

Restrict this to the 2 or 3 main examples which are both plausible and will add the most to sales growth and profitability. You should also include any efficiency, risk-reduction, and/or cost reduction measures.

The Challenges and Risk

All businesses have challenges and risks, so it wouldn’t be wise to pretend otherwise. Describe the top 2 to 4 main challenges and risks here that are most likely going to impact your business within the next 12 to 24 months.

New or Emerging Competitors

Describe the impact on your profitability due to any new significant competitors that have entered your market during the past 1 to 2 years, or new ones that you know are about to enter.

Improvement Actions Already Taken

By highlighting 2 to 5 significant improvement measures that you’ve taken, particularly in recent times, you’ll demonstrate a progressive and proactive approach to running your business.

Appendices

List the documents that you consider as attachments to this sales memorandum.

  1. Document 1
  2. Document 2
  3. Document 3