Preparing a Sales Memorandum

Selling A Business: The Sales Memorandum

Written by: Joshua M King

Business Sale of Business

Posted almost 2 years ago. 1 helpful vote

A sales memorandum is a document business sellers prepare to market their business to potential buyers. 

An investment banker or business broker can help you produce a sales memorandum, but if you decide to go it alone then here is a broad outline of the details the document should include:

The fundamental challenge in composing a sales memorandum is to present your business in a positive light without exaggerating its merits or downplaying its drawbacks. Misleading buyers will backfire, wasting not just their time but yours too when they conduct further research – called the due diligence process – and discover the business is less attractive than portrayed in the memorandum. Trust will be fatally eroded and in most instances your sales negotiations will collapse.


What Is A Selling Memorandum In Connection With The Sale Of A Business?

When preparing your business for sale, you will want to present the most accurate, up-to-date information about the business for prospective buyers. Known as a selling memorandum, this document is a marketing piece designed to highlight all aspects of your business.

The selling memorandum should discuss the details of your company, including:

You will also need to include accurate financial information, including sales figures, cash flow, the value of your assets, profit margin, and how the numbers have changed over the years. This can take the form of charts or graphs, or a combination. Finally, you can include your asking price.


Write A Selling Memorandum

At some point in your company’s growth curve, an opportunity will present itself where you will be faced with the decision of whether to sell your business. Whether you decide to sell your entire company, or simply divest yourself of a division or subsidiary, BizPlanIt can assist you in preparing a Selling Memorandum appropriate to your situation.BizPlanIt Selling Memorandums provide potential buyers with an excellent first impression by powerfully presenting a clear, concise and compelling story of your business. Each Selling Memorandum provides the buyer with an explanation of your company’s past and present, and more importantly, sells them on its future potential, in a well-documented and believable manner.BizPlanIt Selling Memorandums take buyers on an organized "tour” of your company, including:


Preparation Of The Selling Memorandum - Generational Equity

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In our workshops about how and when to sell a company for the most profit, we spend a great deal of time educating our attendees about selling their companies on their own because the reality is that many small businesses will choose to find a buyer without the help of a professional M&A firm. Although this can be done successfully, the odds of getting an optimal deal – a deal where you find the right buyer, at the right time, for the right price, with the right deal structure – drop dramatically if you are on your own.

Why does this happen all too often? The documentation preparation phase is one key area that most business owners spend too little time on prior to hitting the market. Who can blame them? Most business owners are experts in their particular industries. Over the years they have developed the expertise to be successful in their line of business. What they are not experts on is evaluating a company for potential sale.


Cherry Hill Business Advisors: Article About The Importance Of A Selling Memorandum

The agreement between the seller of a business and a business broker that details their agreement. Typically, the listing agreement will include the fees to be paid to the broker, how those fees will be paid and the work that the broker is to perform.

No. In order to perform due diligence, a buyer will need to have a general customer list that includes the number of customers, which provide a large part of the business income, and which are loyal clients of the business. However, you will not need to reveal the identities of your customers until the deal actually closes. Your broker can help you generate a general customer list and include terms in your contract that release the identities of customers at closing.



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