The specific information that will be required by a company broker or intermediary to prepare your company for sale depends upon the industry in which your company operates. However , certain information is going to be necessary and beneficial regardless of industry:
o Three to Five Years Historical Economic Statements / Tax Returns – Even though a business buyer will be paying you for what the business is set to achieve going forward (as of the date associated with sale), they will look to your historic financial statements (and tax returns) to assess the risk of your expected earnings stream.
o Interim Monetary Statements for the last Three Fiscal Intervals – Very few business transactions will close at the end of a company’s fiscal year. As a result, interim financial claims will be required by a buyer, as well as your broker / intermediary to fill up the void between the company’s newest fiscal year end statements as well as the current date / date associated with sale.
o List of Assets Integrated and Excluded in the Sale – Your broker / intermediary will have to demonstrate to a buyer exactly what they are getting in return for their investment. Using a prepared list of both tangible and intangible assets included and ruled out from the transaction not only helps clearly present to a buyer what they are obtaining but also helps eliminate any discrepancies at closing.
o Schedule associated with Indebtedness of the Business – If the proposed transaction is an asset purchase or a stock sale will figure out the relevancy of this information. Only when the assets are being purchased with the acquirer, the existing debt obligations will remain the responsibility of the seller and be appealing to the acquirer only to make certain that all of claims to the assets are eliminated at closing. However , if the customer is purchasing an equity risk in the company, they will need to be familiar with company’s full financial picture in order to make a buying decision.
o Before Appraisal and Valuation Reports — Although a current valuation or evaluation may be one of the services offered by your broker / intermediary, providing formerly completed valuation reports will help your representatives and buyers understand how your business has changed and grown over time.
um Business Plans and Projections : Although a buyer will look towards the historical financial statements for an understanding of risk, price will be determined based on what the business is set up to achieve going forward as of the date of purchase. Nobody has a better understanding of this particular than you, the seller. The best way to demonstrate your future expectations is to prepare a company plan that includes financial projections.
um Marketing Materials – Nobody knows your business and its products or services better than you do. Chances are you’ve been selling the advantages of your products and services to customers for years. There’s no need for your representatives in order to recreate the wheel.
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The benefits of your products and services to your customers are the same ones your broker / intermediary will have to sell to a prospective purchaser.
um Economic and Industry Data — Although your broker / intermediary will do their own economic and industry research, there may be information available to you being an industry insider that is not readily available via external sources. Providing this information for your broker / intermediary will help them cast your business in the best possible light when working with buyers.