What Business Information Will I, As A Seller, Need To Share With A Buyer?
A seminar that we do is called “What to expect, when you’re expecting….to sell a business”. In that presentation one of the things that we discuss is the business information that the seller is going to be sharing with the buyer(s). The short answer is “a lot”.
Of course, we are only talking about “qualified” buyers, who have signed a confidentiality agreement. By “qualified” we mean someone that has the “where with all” ($$$), and skill set to operate/own the business.
The first step will be sharing enough business information to get the buyer interested in the first place. In this step, called the “public phase”, general information like annual revenue, earnings, industry or type of business, and probably some sort of geographical component are shared with the qualified buyer.
In the next step, the “private/confidential” phase. Expect to share:
- Name and address of business
- Historical Financial statements- profit & loss and balance sheets generally three to five years
- Budgets & projections for the present and future
- Business Tax returns
- Accounts Receivable Aging
- List of FF &E (furniture, fixtures, & equipment)
- Employee list
- Facility and equipment leases
- Pension, profit-sharing, and all other benefits
- Union contracts or organization activity
- Pending or threatened litigation
- Customer lists (usually one of the last things shared)
- Any other important agreements
Some of the more sensitive business information may not be shared until due diligence (an offer has been accepted, Letter of Intent (LOI) is in place and a “good faith” deposit has been received).