Selling a Business: Exploring the Offering Memorandum

If you own a business and you want to put it on the market, you need to create marketing materials to tell people about your company. One of the primary items to create will be your offering memorandum.

This straightforward document will share information with potential buyers demonstrating your company’s value. It’s an introduction for people who might be interested in buying and want to find out more information. With a great introduction, you can secure the highest selling price possible.

Let’s explore how to create an effective offering memorandum.

The Executive Summary

Your offering memorandum will open with a factual summary of your business. This is your first opportunity to promote your company and demonstrate its value.

In this section, you should explain to potential buyers why purchasing your business is a smart decision. The executive summary will also go through the highlights of your company.

It should outline:

• How large your company is
• What assets your company has
• What the management structure looks like
• The ownership structure
• Financial highlights regarding your revenue
• An introduction to your company’s products and services
• An introduction to the market

Your executive summary is one of the most important parts of your offering memorandum. The more coherent and compelling it is, the more prospective buyers will be intrigued to learn more. Try to write in a way that captures the imagination and paints a vision for the buyer.

Data and Figures

Although you don’t want to disclose detailed financial records in your offering memorandum, you should share basic data and figures. Consider creating graphics that represent your earnings and potential for visual appeal.

For guidance on how much information to share in your offering memorandum, you should contact a business broker. Depending on what kind of business you run, it could be more or less important to include certain facts and figures.

Other Essential Elements

It’s nice to include information about the history of your company. Share about where you got the idea for your company. Tell the story of how you rose to the position you are in today.

You can also include detailed information about your structure and employees to give interested buyers a better idea of what day to day operations are like.

You should also include a section that specifically addresses how your company stacks up against its competition. Potential buyers will be curious to learn about your competitive advantages.

For Help With Your Offering Memorandum

Working with a seasoned business broker will help you improve the quality of your offering memorandum. They can help you decide what information to include and frame the information to make your business look like a good investment. Remember, your offering memorandum is the first point of contact between you and prospective buyers. This is your only chance to make a first impression. Work with a professional to ensure you maximize your sale price.

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