Selling a Privately Owned Business – Briefing 10 – Sale Documentation
So, you’ve carried out all your
planning and preparation, you’ve chosen your advisors and are now ready to
commence the sale.
One of the first requirements
is to put together information about the business for potential buyers. There will be a number of documents, but the
key information will be set out in an “Information Memorandum”.
Preparing and presenting that
information is extremely important, here are ten pointers to help manage the
is always paramount and this should be reflected in the documentation used to
sell your business.
that reason you should have two separate documents, the first a brief
non-confidential summary to provide to interested parties, followed by the full
Prospectus or Memorandum. The latter
will be provided only to serious interested parties who have been fully vetted
and who have signed a formal confidentiality undertaking.
Memorandum is a selling document, its prime purpose is to entice the buyer to
meet and find out more about the business.
An acquisition is always a strategic purchase, and the best buyers will usually
have a choice of possible targets. Your
Memorandum must raise the profile of your business to the top of their pile.
Memorandum must be comprehensive, but must give a buyer hard facts not
rhetoric. Hype, superlatives and
pretentiousness must be avoided. Buyers will usually be experienced and will
see through unsubstantiated rhetoric.
The Memorandum must focus on the key attributes about the business and
the Memorandum must not be a turgid document over-stuffed with unnecessary
information. Information can be easily
divided into key sections, such as strategic information, operational and
buy solutions to their objectives. The
Memorandum must fully address strategic factors and clearly demonstrate how
your business differentiates from the competition, and its “unique selling
providing the majority of the required information about the business, the
Memorandum will never provide 100% of all required information. Confidentiality and commercial sensitivity
will dictate that certain information will be withheld until later in the
process. From a selling perspective it
is also helpful to “keep some powder dry” for subsequent discussions.
Memorandum should also be a flexible document, tailored to individual
circumstances. It will not always be
necessary to provide the same information to every buyer, and in some
instances, particularly where a potential buyer is considered particularly good
or attractive, specific information relevant to their individual circumstances
should be added to the base document.
can only make their decisions based on the information you as seller provide to
them. They will rely on that
information, so it is important to keep full and accurate records of all
information given to all interested parties.
an Information Memorandum is not generally a prospectus in the legal sense, and
thus it’s not normally necessary for lawyers to independently verify that – and your adviser will deal with that
6 November 2019