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Seller Memorandums are the industry
standard for Investment Bankers representing $100 million companies.
Selby Associates delivers this level of service to the smaller company
by preparing a detailed Seller Memorandum for each client, a rarity
in the small market niche ($1m to $25m).
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We analyze every business, compile and prepare documentation
for a detailed, comprehensive Seller Memorandum to effectively present
and sell the business.
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It is the Seller’s responsibility to prove
the value of their company and our Seller Memorandum is a successful
and lucrative tool to present and sell a business and establish the
value.
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Presents a clear picture of a business and its operation
thereby improving the likelihood of the best price, the best terms and
a quick transaction.
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Highlights the value of the business and, if appropriate,
the future potential of the business. Buyers are buying the future of
a business.
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Includes a Recast of the business financials for
3 prior years and current year. Most businesses operate to minimize
taxes, which unfortunately also minimizes the business value. A proper
Profit and Loss Recast presents the true available cash flow (“Recast
Cash Flow”) to a potential Buyer and thus supports the true business
value. The Recast Cash Flow is the amount that is available for the
Buyer’s salary and Buyer’s debt service. Recast Cash Flow
takes into consideration EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization), Owner's Compensation, Addback adjustments and Normalization
of certain expenses and is an accurate representation of the true available
cash flow for the Buyer. Addback adjustments increase available cash
flow and may include: owner’s salary, bonuses and other payments
to the owner or owner’s family/friends, owner expenses such as
retirement plan contributions, automobile leases, auto insurance, cell
phones and other owner perks, or can be one-time expenses atypical of
the historical average such as bad debt or legal fees or accounting
fees for a previously settled lawsuit. Normalization can increase or
decrease available cash flow. Normalization adjustments are expenses
that an existing business does not incur but a Buyer will incur or adjustments
to an existing business expense because a Buyer will incur a different
expense (higher or lower). Normalization adjustments may include: excess
payroll, rent if building is owned by current owner and current owner
pays no rent or non-market rate rent, or a salary that would be necessary
to replace an owner or family member.
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Includes equipment or asset appraisals and realtor
opinion letters, as well as, other third party documentation as necessary.
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Our Seller Memorandum is a proven technique to sell
a business quickly and professionally at a higher price. Buyers usually
are considering multiple businesses in their search. Our experience
shows that once Buyers are presented with our Seller Memorandum, they
are able to make a quicker, more informed decision regarding a purchase.
Also, in most cases, our Seller Memorandum presents a business as more
attractive than other businesses a Buyer is considering. Buyers typically
face challenges obtaining comprehensive information on the businesses
they are interested in purchasing. We often have in excess of 100 hours
of work in each Seller Memorandum and most Buyers cannot afford to spend
100 hours on EACH company they are potentially considering purchasing.
The result is that our clients’ businesses look more attractive,
often receive multiple offers, receive offers in less time, and sell
at a higher price.
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We understand what Buyers desire
-- cash flow, appearances, value, future potential and eliminating the
surprises -- and Selby Associates utilizes the Seller Memorandum to
effectively position the business.
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We offer 2 versions of our Seller Memorandum –
a basic Seller Memorandum and an extensive Seller Memorandum. Both detail
the business, however, the extensive Seller Memorandum is for businesses
that have $2m+ revenues or may require more detail. All of our Seller
Memorandums include sections addressing the following: Business Operation
(Products and Services), Recast Financials and Notes of Explanation,
Customers, Market, Competition, Company Organization including employees,
and a Summary section that addresses the reason for the sale, the Seller’s
plan of exit and the price.
