Primer on Business Sale Offering Memorandums

If you’re considering selling your business in the near future, there will be several important areas of documentation involved in the process. From basic valuation forms to offer sheets, sale proposals and numerous others, be prepared to deal with some paperwork as you move toward selling a business.

At Utah Business Consultants, we’re here to help with this and much more. Our business brokerage and exit planning services have helped numerous clients sell their businesses for a great return, all while minimizing hassle and allowing for focus on other areas while we handle the heavy lifting. One vital document for sellers to be aware of here is known as the offering memorandum, which we’ll be glad to assist you with – let’s go over what this is plus the important elements within it that will help improve your sale prospects.

Offering Memorandum Basics

Broadly speaking, an offering memorandum is a legal document that lays out your objectives, risks and the terms of any investment made in the company if someone decides to purchase it. It lays out areas like your financial statements, management biographies, descriptions of your business operations and much more.

Essentially, it’s a broad document that allows prospective buyers to get a closer look at some of the vital details of a potential acquisition. In some cases, you may also see these referred to as selling memorandums.

Our next couple sections will go over the important areas of an offering memorandum to keep an eye on.

Executive Summary

Perhaps the most important section of the offering memorandum is the executive summary, which generally comes at the beginning. This is one of the only sections where “promoting” and “selling” themes are generally accepted – much of the rest of the document should only contain direct facts and numbers without any spin.

In this section, you layout why acquiring your business would be a good decision for a prospective buyer. Include highlights of your company, from how it was formed to how it’s managed, the employee structure and other positive qualities. Include information on your market, and also take the time to explain why you’re selling at this time. This is your change to pique the interest of prospective buyers and get them interested in learning more.

Other Important Factors

Here are some other important elements to include in your offering memorandum:

• Overview of the company, including its history, markets, products and services, distribution networks, clients and competitors.
• Detailed information on your company’s management and growth strategies.
• List of competitive advantages you hold in the market.
• A well-written conclusion and various exhibits to provide evidence of your points.

For more on the offering memorandum during a business sale, or to learn about any of our exit planning or business valuation services, speak to the staff at Utah Business Consultants today.