When selling property, be it commercial or residential, it has been proven that the marketing or promotion of the property is more important than the information provided to the buyers.
This means you can have limited information about the asset you are selling and if you promote the opportunity well enough. The asset is priced reasonably, you can provide limited information to the market, and it will likely sell.
When selling a business, if you don't provide all the correct information to the buyer, it doesn't matter how much you invest in marketing and how many buyers you generate. It will not sell.
Of most businesses offered for sale, 80% are poorly presented and do not provide the necessary information to enable buyers to make an informed decision.
Information is more critical than marketing when it comes to selling a business. We can list it on just one website with limited investment in marketing.
No matter how effective your marketing efforts are, selling a fundamentally flawed or "dud" product is nearly impossible for several reasons. A business without the supporting information is a dud.
If you want to sell for a premium, you will need to convert more people than just the buyer.
You likely will need to convert the buyers:
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accountant
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banker
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lawyer
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business advisor
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friend who owned a business years ago
The importance of preparing and presenting information before marketing can not be overstated.
You only have one chance to make a great first impression.
Information trumps marketing whenever it comes to selling a business.
Why are we harping on about this? The critical battle for business brokers is getting the source documents and answers to questions to prepare a sale document.
What is the information we are talking about?
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Source documents.
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Questions and Answers
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Individual custom information
The source documents include things like
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Financial statements
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Earnings reports
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Property leases
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Asset lists
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People list
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Supplier list
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Sales data
These are factual documents.
Questions and answers are like:
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What type of billing system do you use
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How many hours a week do the owners work
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How long has the business been in operation
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why are you selling
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sale conditions applied
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required working capital
There are about 50-80 default questions.
Individual custom information:
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the story of the business
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the business model
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industry benchmarking documents
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Product Summary
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LVR letter
This information is created for the business using information provided by the owners or sourced from third-party sources.
The first stage of preparing a business is sourcing these three types of information and collating that information with supporting plans and imagery to what is commonly called an Information Memorandum or Business Information Package.
This comprehensive single document summarises all the source documents, questions and answers and custom information. The battle to win the buyer is won and lost here.
This should be provided to the buyer within 8 hours of signing the confidentiality agreement.
The buyer should be able to read it and understand the results of the business, how it works and what they get if they buy it.
The documents supporting the IM or BIP should follow as soon as the buyer has been qualified.
If your information is more comprehensive and provided quicker and succinctly than your competition, you can sell for better terms.
If you are not prepared to provide all the source documents, answer the core questions and do the work to provide compelling custom information. Then, I suggest forgetting this selling process or dramatically adjusting your timing and value expectations.
If you are committed to selling for a premium, with the quickest time frame and a minimum of fuss, then we will work with you to create a world-class BIP and information management system for buyers.
Below is an example BIP and some of the source documents we need.
