In order to properly represent your business you will need to create a document that shows the business in the best possible light to prospective buyers.  This document, which we call a Confidential Business Memorandum or CBR, should include an overview of the business as well as operational, financial and marketing information. Photographs of your business are always a great addition to the CBR as are case studies, testimonials and customer profiles.

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The purpose of the CBR is to encourage further response yet allow uninterested parties to disqualify themselves without taking up all your time.  It won’t sell the business on its own.

We recommend the following sections in the CBR:

  • Confidentiality notice and disclaimer
  • Executive Summary (who should buy and why they should buy)
  • History (brief company/owner story)
  • Management (key people, not by names but by qualifications and responsibilities)
  • Products/Customers/Sales (what do you do, what makes you unique and profitable)
  • Tangible and Intangible Assets and Facilities (what does the Buyer receive for his money)
  • Growth Potential (the ways in which an energetic new Buyer can continue to grow the business)
  • Financial Information for the past three to five years (If the financials summary are consistent, or if the company is large, project two to three years out.)
  • Equipment and Vehicle List (If you have it, show it.  We often recommend showing the current market value of the equipment.)
  • Inventory and Supplies that the business usually has on hand.


Every business is different.  Some of these categories may not be important to all businesses.  For instance, an equipment list is of much less value to a consulting firm but essential to the sale of printing company.


With a small business worth up to half a million dollars, one or two pages of text and a page or two of financial information will make up the entire package.  For larger companies the package may exceed 25 pages. Remember that this is a package designed to sell.  While 50 pages of in-depth detail about your business may be impressive, it will take the average Buyer far too long to wade through.  He or she wants a quick and honest summary.  Anyway, you really do not want to be revealing detailed secrets to people you have never met.


Simply, clearly, and briefly explain how the business works and why the Buyer would be quite safe investing his money and time in your business.  Explain briefly how the goods or services are sold, the work is accomplished, and who manages the process.  How will they grow the business?   If you have more than four pages of text add an executive summary.

For the financial pages we suggest you summarize the following information:

  • Sales Revenue
  • Cost of Goods Sold
  • Gross Profit Margin
  • Major Expenses such as rent, advertising, payroll
  • Other Expenses
  • Profit
  • Add Backs:
  • Owner’s Salary (salary, bonus etc., can include other family members if little work done)
  • Owner’s expenses (owner’s auto, travel, meals, health insurance, etc.)
  • Interest (the Buyer will calculate their own interest)
  • Depreciation and amortization (not an actual cash outlay in the year taken)
  • Cost Savings or One Time Expenses (an example is a large legal fee from a one time lawsuit)
  • Subtractions: savings that cannot transfer (usually under-market rent when the building is owned by the Seller)


All of these equal the Seller’s discretionary earnings.

Show these figures over a three year period to give the Buyer an idea of the income he would be buying. If there is some consistent growth, project out for two years showing those increases in cash flow.

After you have completed your sales package, go back over it with an eagle eye to ensure that the key benefits, organized systems, and growth prospects are clearly indicated.  Make sure the financial information is clear even though it is summarized.  Remember that this is a sales package not a college thesis but do look out for spelling errors, grammatical mistakes, and clarity of meaning.

With larger businesses it may be prudent to prepare a complete business plan showing how the business could provide benefits or synergies to a Buyer. Show the potential cost savings created by reducing duplicate overheads so the Buyer can benefit from economies of scale. Again, you are trying to strengthen your negotiating position as a seller.

Intermediaries, Investment Bankers, and Merger and Acquisition Specialists are all brokers and advisors with different networks and abilities.  As the transactions get larger the advisory aspect of a broker relationship increases in value to the Seller.  It is likely that good advice will increase the final value by at least 15% above the original starting value.  It may not be worth paying a consulting fee on a $100,000 business sale but for a ten million dollar business, that is a whole different ball game!

In general, brokers work with businesses up to about $1,500,000 in value; intermediaries handle businesses worth between $1,500,000 to $7,500,000; and investment bankers and merger and acquisition specialists manage the $5,000,000 to $10,000,000 on up crowd.  Still, there is a lot of overlap between the groups at the edges.


This article was written by Harvest Business Advisor Partner Richard Stopa,


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia.
Connect with us at or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.