How to Sell Your Business, page 10

Company and Product Brochures

Planning a sale is a good time to upgrade any company or product brochures that look dowdy. If you do not have company or product literature, this may be a good time to create it.

Product literature is particularly important to the business sale. (It is important to regular sales as well, so if yours needs fixing, consider it worth doing apart from issues of selling the business.)

A strategic buyer may only really care about your product. In this case, your product literature is the most important sales collateral you have (apart from the products themselves). For a great many buyers, the product or services comes first as a necessary condition. If they like the product, then they will want to dig deeper into the financials, but if they don’t believe in the offering, they will have no interest.

It may well be wise to limit the disclosures about your business that you make until a party gets very serious about buying (see the discussion of Confidentiality later in this article). In this case, your product literature, provided you are not embarrassed buy it, constitutes a non-incriminating ambassador describing your company. Slick, professional literature describing your offerings (whether product or service) is one of the best ways to interest buyers. It helps that the literature targets customers rather than business buyers, provided that the unique selling proposition it portrays is compelling.

Audited Financials

Maintaining audited financials is expensive and somewhat time consuming; so many small businesses make do with an accounting firm’s Opinion Letter, or simply maintain financial records in QuickBooks without any kind of oversight. (Usually, an Opinion Letter states that the statements are deemed correct but based upon management’s representations, which have not been verified.)

Anything other than fully audited financial statements going back as far as possible will cost you dearly when you sell your business. For one thing, most buyers will insist on fully auditing your records, probably giving them plenty of renegotiating “wiggle room” along the way. For another, you are in a far stronger position to set prices if your financial statements are fully audited.

Not only is it expensive to audit financials, it is also time consuming. In some cases, particularly involving inventory levels, complete cycles must be followed. So the time to get started is now.

Some businesses are simply too small to justify the expense of preparing audited financials, and in some situations it is not germane (for example, an asset sale of intellectual property to a strategic purchaser). Even in these cases, you should meet at an early point with your accountant to try to bring as much order as possible into your financial records.

Audited financial statements going back as far as possible are the best things to have. If you don’t have them, meet as soon as possible with your accountant to figure out your best strategy.

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