Sell a Business | Marketing Matters in Sale of Business

Most business owners understand what good quality marketing materials can do for their business. They hire high-priced talent and spend whatever they need to maximize sales.

But when it comes time to sell their business—not a product, but their whole business—suddenly they forget the importance of good marketing. We see owners try to sell their company with nothing but a one page flyer, almost as if they were selling a house.

Worse, we see brokerage firms making minimal effort, pulling together a few photocopies with a corner staple. That doesn’t build buyer confidence.

The “offering memorandum” is one of the main tools you have to add value during the sale process. It serves several purposes: it 1) communicates value, 2) helps buyers self-select, and 3) accelerates the process.

The offering memorandum (OM) outlines company history, market position, investment highlights, and growth opportunities. Our philosophy is that the OM should answer 85-90% of a buyer’s questions.

A thorough overview is simply more efficient for the seller. The alternative is a series of conference calls or emails in which the seller is asked to provide the same information over and over again.

That kind of piecemeal process leads to distraction, which ultimately hurts the bottom line. Plus, it may even raise suspicions among savvy staff members who wonder why they’re repeatedly being asked to pull a particular report or dig up some unusual information.
Meanwhile, the buyers may not know if they’re really interested. They don’t know, because they don’t yet have all the information they need to make a decision. This slow information trickle becomes a huge time waster.

The third thing a thorough OM will do is allow the buyer’s professionals—accountant, attorney, due diligence team, lender—to get up to speed quickly. Much of the information they need is in this book. And the faster the buyer can act, the better for the seller. Overall the OM is a great business planning tool—even if you’re not planning to sell immediately. It helps you focus on value drivers that matter most to a buyer.

I remember one owner, looking to sell a business, who came to us with a potential buyer at the table. He had a target sale number in his head, and wanted help with negotiations. We spent weeks on his OM, learning about his business and capturing its true value.

The document helped the seller better understand his business and it told the buyer, in no uncertain terms, that we understood its value to them as well. In the end, he sold for three times his target figure.
If you’re evaluating M&A firms, ask to see some of their past OM books. Compare one firm’s materials to another and then ask yourself, “Which company would I want to buy?”

By Scott Bushkie

Scott Bushkie is Managing Partner and Founder of DealCoach.

With more than 20 years in the Mergers and Acquisitions (M&A) industry, Scott is a recognized leader in the field, providing exit strategies, business valuations, and M&A advisory services to business owners in the lower middle market. He has successfully executed sales to domestic and international buyers, private equity firms, family offices, and strategic buyers. Follow DealCoach on Linkedin

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About DealCoach

DealCoach is headquartered in Green Bay Wisconsin with an office in Milwaukee Wisconsin and helps customers find out how much their business is worth with online business valuations and advisory services. Our business valuations also known as an Estimate of Value (EOV), help prepare buyers and sellers for the sale.  DealCoach also helps business owners grow value with a Business and Market Analysis and plan for retirement, estate & financial planning, benchmarking, and strategic planning. DealCoach servers and has provided business valuations for businesses located in the United States and Canada. 

We are here to tell you what you need to hear in order to make a well-informed decision with most likely the largest financial transaction of your life. Our team has over two decades of M&A experience, and we have been completing Estimates of Value for our clients for over nine years.

 

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