If you are selling your business you need to initially provide the following information:
Price – This might be stating the obvious, but I have seen many a business for sale where the owner has indicated “price on application”. This is a mistake in my opinion, as you could be wasting both your time and the potential purchaser’s time. Price of the business is possibly a starting point for most investors after the type of business that it is. Most people have a “budget” if you like of what they are looking to invest and if this is omitted you might be closing the door on potential buyers – I for example, tend to give these businesses a miss.
Type of business – I would imagine that the majority of investors will be looking for a specific type of business to invest in, so the business type is a must disclosure.
Profit and turnover – The profitability of your business is a good indicator of how the business is doing and helps the buyer to establish how long it will take him to get a return on his investment. Also, one of the most popular ways to value a business is on a profit multiple so when you disclose the price and the profit a buyer can do a calculation on the valuation multiple.
For example, your profits might be say £100,000 per annum and your purchase price £300,000 – therefore, the multiple is three.
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Disclosing the turnover of your business will provide the buyer with an idea of the size of your business too. For example a business producing a profit of £100,000 with a turnover of £200,000 is completely different to one producing the same level of profit, but with a turnover of say £2,000,000.
Business description – Your business description gives you the opportunity to sell your business to a potential buyer. Tell the buyers why you are selling and tell them a bit more about what the business does. How many employees it has and what your involvement is within the company.
Remember, the less reliant on the owner the business is, the more valuable it is to a potential buyer. For example, an electritian that works for himself and serves a number of clients personally – his business is not worth as much in profit multiples as one that has a number of electritians as employees with managers and premises etc.
