The specific information that will be required by a business broker or intermediary to prepare your business for sale depends upon the industry in which your business operates. However , certain information will be necessary and beneficial regardless of sector:
o Three to Five Years Historical Economic Statements / Tax Returns – Although a business buyer will be paying you for what the business is set to complete going forward (as of the date of sale), they will look to your historic financial statements (and tax returns) to assess the risk of your expected earnings stream.
o Interim Monetary Statements for the last Three Fiscal Periods – Very few business transactions will certainly close at the end of a company’s financial year. As a result, interim financial claims will be required by a buyer, as well as your broker / intermediary to fill the void between the company’s newest fiscal year end statements and the current date / date of sale.
o List of Assets Integrated and Excluded in the Sale – Your broker / intermediary will need to demonstrate to a buyer exactly what they are getting in return for their investment. Creating a prepared list of both tangible plus intangible assets included and ruled out from the transaction not only helps obviously present to a buyer what they are getting but also helps eliminate any discrepancies at closing.
o Schedule of Indebtedness of the Business – If the proposed transaction is an asset purchase or a stock sale will figure out the relevancy of this information. If only the assets are being purchased with the acquirer, the existing debt obligations will remain the responsibility of the seller and be appealing to the acquirer only to make certain that most claims to the assets are taken out at closing. However , if the buyer is purchasing an equity stake in the company, they will need to understand the company’s full financial picture to make a buying decision.
o Prior Appraisal and Valuation Reports — Although a current valuation or appraisal may be one of the services offered by your broker / intermediary, providing formerly completed valuation reports will help your own representatives and buyers understand how your business has changed and grown over time.
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o Business Plans and Projections – Although a buyer will look to the historical financial statements for an understanding of risk, price will be determined based on what the business is set up to achieve going forward as of the date of selling. Nobody has a better understanding of this particular than you, the seller. The best way to demonstrate your future expectations is to prepare a business plan that includes financial projections.
um Marketing Materials – Nobody understands your business and its products or services better than you are doing. Chances are you’ve been selling the benefits of your products and services to customers for a long time. There’s no need for your representatives in order to recreate the wheel. The benefits of your products and services to your customers are the same ones your broker / intermediary will have to sell to a prospective purchaser.
o Economic and Industry Data : Although your broker / intermediary will do their own economic and industry research, there may be information available to you being an industry insider that is not readily available by means of external sources. Providing this information for your broker / intermediary will help them cast your business in the best possible light when working with buyers.