The Sunbelt Process: We’re very pleased to be in a position to assist you as a business owner to further your ambitions including a sale of your business. In order for us to engage this process fully, we’ll ask you to assemble and provide to us at your earliest convenience the following documents or information:
• 3 Years (5 years is preferred) accountant prepared financial statements including balance sheets. • Year-to-date interim financial statements, either management prepared or accountant prepared. • Copies of the lease for your premises, and any other leases or contracts for equipment, vehicles, etc. • A list of furniture, fixtures and equipment (“FFE”) and its estimated current market value. • Average level of your business inventory and any seasonal fluctuations we should be aware of. • A printed copy out of your current fiscal year General Ledger (or digital file in PDF format). You will formally engage Sunbelt to work with you in preparing your business for sale by signing our standard form of “Engagement Agreement”. Upon signing we will begin work on a Broker’s Opinion of Value for your business, known as the “Most Probable Selling Price” report (or “MPSP”).
We will collect a cheque from you at that point for the non-refundable Engagement Fee as per the following, plus GST:
$1,500 for Businesses in estimated value of up to $1M $4,500 for Businesses in estimated value of $1M to $3M $4,500 + costs for Businesses in estimated value of over $3M
As most sellers’ financial statements are designed to minimize tax liability, they may not express the true earnings of the business and would not be effective in supporting the appropriate selling price. We will work with you to confidentially complete a recasting or normalization of the financial information enabling us to provide a reasonable and critical assessment of the likely selling price.
Our opinion of value is based on various methodologies, your specific knowledge of the business, current market conditions, future growth potential and opportunity, etc. The recasting of financials and determination of the MPSP could take up to two weeks depending on the complexity of the business and the availability of detailed and complete financial statements and information. It is not unheard of for owners to have overly optimistic - sometimes unrealistic - expectations regarding the value of their business. It is important to realize that the market will ultimately determine the actual selling price, which may or may not bear a close relationship with the owners subjective opinion of value. In considering an asking price, it is important to “think like a buyer”. Buyers are motivated by both the reason the business is for sale and by the right price being presented. Buyers will not pay very much for “opportunities or potential” that are as yet unrealized.
Please bear in mind: All information received by Sunbelt about your business is held in strict confidence, and detailed information including financial information will ONLY be released to potential buyers who sign and deliver the Sunbelt Non-Disclosure & Confidentiality Agreement, and who indicate they have the means to purchase the business.
The Sunbelt Broker will present and go over with you the MPSP report once it is ready. Some owners may choose at this stage to delay listing the business for sale while issues are addressed that may add value. Most owners at this stage are able to suggest an asking price based on the MPSP and direct Sunbelt to proceed with the listing and sale of the business. At this point a “Marketing Memorandum” is prepared to summarize the terms of the listing, including the most important of these: asking price, terms of payment, and any conditions of particular importance to you as the seller. Your signature on that document commences the engagement period of 12 months for the business. The Broker and Sunbelt staff will then prepare summary and detailed profiles and other marketing materials to package the business for sale. One such document is known as the “Confidential Business Profile” (CBP). This is a multi-page document with detailed information about the business, your industry, market trends and conditions and so on. The CBP contains everything a potential buyer may find relevant in order to understand the opportunity and take action where the business is of interest to them. In order to complete this stage of the process and effectively list your business for sale, the Broker may ask for more information and continuous updates. We will compile information about your business, conduct research on the business, the industry, overall economic factors, the competitive environment and so on. The Broker will remain in contact with you throughout this information-gathering and processing period, and you will have the chance to review and approve all descriptions and profiles created for use in marketing the business.
During the period of time the business is on the market, it is important that the Seller cooperate with the Broker to prepare and maintain certain records and information that will be required during the “Due Diligence” phase of any potential sale.
Due Diligence refers to the inspection and verification of information, documents and records that a potential Buyer will undertake who has made an offer to purchase that has been accepted. Your Broker will explain this and work with you to identify and collect the documents and information that will be part of this process.
Sunbelt is committed to doing a really good job helping owners achieve their objectives through a timely and best-value sale of a business, and invests a lot of time and resources into bringing this about. By entering into an Engagement Agreement with Sunbelt, a business owner ALSO makes a significant legal, financial and personal commitment. Sunbelt recognizes and acknowledges this commitment, is grateful for the opportunity to work with owners in this process, and looks forward to getting started!
Sunbelt Business Brokers (Victoria) Inc.
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