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The process

When you come to the sale process each particular transaction has its own nuance. These depend not only on the size of the deal in question but also on the industry and the personalities of the parties involved. Once you are surrounded by the appropriate advisers, inter­nal and external, and have taken part in the tax grooming process, these are some of the activities that are likely to occur.

1. Creating your company's information memorandum

It is possible to sell some companies without an information memorandum (IM), but for an average-sized business it is highly recommended. This document provides a detailed description of the organisation you are presenting for sale. Getting the con­tent of this pitched correctly in terms of detail and volume is an art form. Too much and it is boring and may even impart confidential information too soon. If it is too brief you will be besieged with requests for additional data - or potential acquirers will be left cold by what's in front of them and 'won't bite'. IM can be described as a CV for a prospective employer. Its content ensures your target acquirers are sufficiently inter­ested to meet you but there's enough additional information to garner further interest during a face-to-face meeting.

Your corporate-finance team will probably write most of this for you, using your input of course. Although the detailed con­tent will be specific to your business the following areas should typically be covered.

•  Executive summary. A few pages to summarise the content within the memorandum.

•  Your company information. This should cover your ration­ale for selling. Write this with care and include a brief history of the business and reasons why it is successful.

•  The industry. Provide an overview of the industry and its future potential, your market share and a competitor analysis.

•  Your products/service. This is a breakdown of your products and services and their contributions to revenue and profit, how you market them and any new developments pending.

•  Customers and suppliers. An overview of the type of cus­tomers and suppliers you have and a percentage breakdown of trade. While no names are needed, it is worth stating whether they are blue-chip. It is also worthwhile detailing any contracts in existence.

•  Personnel. An organisation chart and a profile of key staff. (No names are needed.)

•  Asset details. If you have an asset register, submit this along with your depreciation policy. Critical assets such as buildings can be photographed.

•  Plans. A brief summary of potential income generation is all that is needed.

•  Financial statements. Three years' audited accounts and up-to-date management accounts are usual.

•  Appendix. This can include, for example, photographs, mar­keting information, leases, detailed CVs, product catalogues.

The most important section is the executive summary, so make it sharp, clear and persuasive. Use colour and photographs and lots of white space and wide margins. If possible email your IM rather than use snail mail. Not only is it immediate but lots of institutional investors need to copy this to various committees and it is much easier to do so if it is accessible electronically.