Selling Your Company Now!

By David Meade

Are you about to acquire or sell a business? Do you have a good Seller's Due Diligence Package? This is what this book is all aboutâ it will give you everything you need to sell your business. When it's time to sell your business, you want to achieve a maximum price, a minimum level of closing costs and the shortest length of due diligence time and closing time possible. Those are the seller's objectives. In order to accomplish this you must provide the buyer with a proper Due Diligence Package. In this book the author goes through, step by step, all of the items needed to package and present your business properly.

This book will help you prepare for what could be the most important negotiations in your life. This book has nailed it with lots of key factors to consider and ultimately implement before and during the sales process of your company. Having key documents in place is really crucial so that you are not stressed with everything that needs to be thought about and covered during the process.

This book is your advisor. Read this book before and during the sale or purchase of a business. The book will help you avoid some very expensive mistakes. Each deal is different so you need to go into it with as much knowledge as you can get. This book is a great eye-opener to this complex process and provides you with very critical information.

This book is a good place to start turning your dream into a reality. SELLING YOUR COMPANY NOW is written mainly for business owners as a guide to selling their business. In clear, thoughtful language, the book manages to take the principles inherent in an ideal "exit strategy" for any business â and make them coherent, accurate and helpful. The insights offered within apply to every size business, from the smallest to the largest. They are fundamental principals that must not be ignored, except at the peril of the sellerâ and the buyer.

• Language: English
• Publisher: eBookIt.com
• Release date: Apr 26, 2016
• ISBN: 9781456626259

David Meade

By profession, David Meade is a research scientist, holding a master's degree in statistics, his background in research and experimental design has enabled him to develop a unique and powerful approach to Pinewood Derby racing. He also enjoys model rocketry and astronomy.

Book preview

INTRODUCTION

Do you have a good Seller’s Due Diligence Package? This is what this book is all about – it will give you everything you need to sell your business. When it’s time to sell your business, you want to achieve a maximum price, a minimum level of closing costs and the shortest length of due diligence time and closing time possible. Those are the seller’s objectives. In order to accomplish this you must provide the buyer with a proper Due Diligence Package. In this book we go through, step by step, all of the items needed to package and present your business properly.

Normally this is a multi-step process. A good Seller’s Due Diligence package has at least a dozen critical items in it, including common size financials (historical), recast and projected financials (at least 5-6 years), a discounted cash flow methodology or an appropriate alternate method listed and explained in detail, a variety of footnotes and limiting conditions, an analysis of all key financial ratios, a description and analysis of the technical and narrative sections of the company’s website, and a description of the method used in determining the net present value of cash flows. A variety of discretionary expenses as well as owner’s compensation are normally added back to attain Free Cash Flow, the basis for all major valuation methodology.

We’ll get into all of this in the book. This report usually has a micro and macro economic analysis as well of the industry and economic status and growth factors projected for the company. The report can be from 30 to 50 pages long. It is released to the prospective buyer only after the buyer signs a standard Non-Disclosure or Confidentiality Agreement, often just a short one-page document. In it the buyer also presents his or her qualifications to a certain extent, usually the amount of liquidity or cash the buyer has to work with and a ballpark estimate of their net worth.

Once that Agreement is signed, then and only then is this very valuable report released. It should answer every conceivable question the buyer will have to allow him to present an offer – a Letter of Intent. The Letter of Intent is stage two. It allows a due diligence period of 30 days or so and allows the buyer to examine the backup for the report. At a minimum this is normally the last 3 years of corporate tax returns for the business, and copies of leases and as well as any other data deemed appropriate between the parties.

The buyer will usually have a Forensic Accountant (like me) representing him. An Attorney will prepare the Letter of Intent. If the term sheet attached to the Purchase Agreement which is subsequent to the Letter of Intent is agreed on by all parties, you have a deal. Often sellers will provide a level of financing to the buyer, some up to 25 to 50% in the terms of a purchase money mortgage, with interest calculated at so many points over prime as listed by the Wall Street Journal. Some buyers may utilize the Seller’s Due Diligence package to obtain bank financing.

The Due Diligence Package will allow you as the seller to reduce the time frame on the overall deal by months. Each buyer will not have