What Records Do Potential Business Buyers Want?
As experienced business brokers Burbank, we know that sharing vital information about your business can be scary. Your business is special and revealing sensitive information to total strangers (buyers) naturally calls for caution. The potential buyer is probably a complete stranger and might not really be interested in buying your business but rather learning your trade secrets. That is why you should not share information blindly.
At So-Cal Business Brokers, we help dampen the shock of sharing the sensitive information by doing so in stages. Our business broker Burbank will ensure you get something in return for every successive revelation. Our experienced team will guide you through all these stages and ensure your information is protected. Here are the stages we use.
Assemble basic, high-level financial information
One thing we have come to learn over the years is that listing a minimum of financial disclosure doesn’t attract much attention. The bare minimum is the annual sales volume and some measure of profitability. In our approach, we strive to give buyers a sense of the profitability and size of your business. With small business listings, we show figures for cash flow or seller’s discretionary earnings. This gives buyers the answer on what’s in for them. Our business broker will help develop a detailed financial snapshot that lures buyers in.
Non-disclosure Agreement (NDA)
The first step will arouse curiosity. If the buyer wishes to learn more about your business, we ask for something in return; the signing of our foolproof non-disclosure agreement. This is a promise to keep the information in confidence. Once the NDA has been signed, we peel back another layer and give potential buyers detailed financial statements. These are normally financial statements for the last 3 years.
Letter of Intent (LOI)
After reviewing the financials and meeting with you, the owner, the buyer will be ready to submit a Letter of Intent. This is basically an offer to purchase your business. The LOI will outline the basic terms of the deal. We will help you review the terms in the LOI. If they are acceptable, the buyer will make a cash deposit which is held in escrow. What the buyer gets in return is the opportunity to deep dive into your business; due diligence.
Due diligence is done in accordance to the terms outlined in the LOI. The buyer reviews your recent tax returns, bank statements, contracts, and other areas including your operating structure. Due diligence helps the buyer to validate the information you shared before and also helps him determine if the purchase is a good investment. When satisfied, the purchase can proceed. If the buyer is not satisfied, he withdraws the offer and gets his deposit back.
So-Cal Business Brokers is here to smooth the business sale transaction. Visit our website and schedule a free consultation with one of our experienced business brokers in Los Angeles.