When you’re selling your business, the information or sales memorandum drives your sale process. It will be a key element in motivating a buyer to the next stage – conducting due diligence on your business. Put yourself in their position and think about what you would want to know.

Think about your process
Consider what you are comfortable revealing at this stage – remember there is no commitment to buy at this point and it is important not to put sensitive or confidential information into the public sphere.

It may be wise to consider some kind of weeding out process so you don’t have too many copies of your sales memorandum at large in the marketplace. It would definitely be wise to ask prospective buyers to sign a non-disclosure agreement before you make the sales memorandum available to them. Flag this in your early discussions with them, whether face to face, by phone or email.

And on that last point, while we’re all familiar with the quick email, dashed off as you rush out the door, be very conscious in your dealings with potential buyers that a carelessly worded email may come back to bite you. Check anything through twice before you hit send.

How do you want the process to lead from the sale memorandum into due diligence? It may be a good idea to suggest a letter of intent as a threshold before your prospective buyer proceeds into due diligence or while waiting for a formal agreement to be drawn up. A letter of intent states the general intention of both parties and agrees key terms. It may identify deal breakers and transitional provisions. It can be long and detailed or short and basic and can involve considerable negotiation in itself. Have your legal advisor on board for this.

If you are starting to think about selling your business, please let us know. We can help you with the sale memorandum and the process of presenting a winning business.