How to Write a Proposal for a Business Sale
While you might have a valuable business to sell, you may not get a fair price, or even an offer, if you don’t communicate the strengths of your company properly. Writing a proposal for a business sale requires listing the benefits of owning and operating the business to a potential buyer, then supporting that premise with projections, facts and figures.
To make your proposal easier to create and to logically develop your content, create an outline of the information you will include. Include a cover page, contents page, executive summary, business description, financial data, list of assets, list of liabilities, future business projections, sale offer and an appendix.
Tell prospective buyers what your business is. Describe your target customers, where your competition comes from, facts about the overall marketplace and what makes your business unique. Discuss your product or service benefits, why there is a demand for it and why that demand will continue.
Tell prospective buyers what the business is currently making each year, in terms of revenues and profits. Include a balance sheet detailing its cash, equipment, inventory, signed contracts and real estate. Also list its intangible benefits -- such as its name, trademark and goodwill -- and assign a justifiable value to each. Document business liabilities, including payables, contracts and leases you’re obligated to honor, balances on items you purchased on credit, taxes, and any other money you owe. Include a budget that details your operating expenses to create your product or service, such as materials and labor, and your overhead costs to run your business, such as rent, insurance and marketing. Detail any partnerships or investors you have.
Provide at least three years’ worth of income and expense figures, if you have them. Discuss why your business has grown or shrunk, any information about its competition or customers that will affect sales in the coming years, and objective information about the marketplace. Provide information on areas where the business might expand, such as adding locations or new products. Consider contacting a business broker who specializes in your market. He can help you determine a selling price based on a multiple of annual earnings and a marketplace analysis.
Tell prospective buyers what you want for your business. Show them what they stand to gain from operating your business using a recap -- but not explanation -- of your financial projections. Tell buyers how soon they will start making a profit once they cover their purchase investment. Consider offering several scenarios for purchasing the business. You might offer to take payment in several installments or take a smaller purchase price in exchange for a percentage of the profits for a number of years. You can offer to work part-time at the business during the transition, or for the first year after the sale. This can make current customers more likely to stay with the company when it has a new owner.
Provide an appendix that includes copies of your company's budgets, marketing materials, and its latest bank statement and tax return. Include relevant articles about your market from credible news outlets, photos or illustrations of your product and packaging, and any other information that will help a potential buyer believe what’s in your proposal document.