The old saying, “You never get a second chance to make a first impression,” applies to much in life but nothing more so than the investment “teaser” you are going to create to attract buyer interest in your business. Also known as the Confidential Business Profile or the Profile Letter, the document is vital to attracting and keeping the attention of a potential buyer. Recently, Axial, an online network that connects business owners with capital providers, did an overview of what they see as critical in creating an effective profile letter. Some of their ideas include:
Each of these is equally critical in the creation of a teaser that will attract buyer attention. Allow me to amplify on these based on our years and years of experience in creating successful profile letters (our success is measured in our regular appearance in the Thomson league tables).
First, fundamentally your teaser should clearly allow buyers to understand what your company does, how it makes money, how it differentiates itself, and – most importantly – why your customers buy from you as opposed to going elsewhere. Far too often inexperienced profile letter writers fill up 2-3 pages with jargon and language that is indefinable. Avoid terms like “industry leader,” “unique market position,” “unlimited potential growth,” etc. Simply state the facts and let them attract and sell the buyer on the business.
In addition, it goes without saying but I will say it anyway: Tell the TRUTH! You will be tempted to embellish (for example, a huge percentage of resumes contain lies, according to experts), but ignore this temptation. Again, let the true facts of your opportunity sell the buyer on your company and, just as importantly, on you.
Keep in mind that buying a privately held company always carries with it an element of risk for the buyer. No matter how large the company is and how well established the business model may be, your privately held company is largely an unknown entity to the outside world, especially when it comes to its financials. So your personal integrity, as well as the company’s, is on the line when you present your opportunity to buyers. So be honest!
Another reality that is key: Make sure that the financials that you present are accurate. The numbers you show should provide a summary of top and bottom-line growth (three years) and projected (five years). In order to save space, it is recommended that you round your numbers in the profile letter to the thousand in your top and bottom-line summary - so $2,335,187 would become $2,335. As for accuracy, the numbers in your teaser will flow from the full documentation that you will have created and placed in your Offering Memorandum.
If you are not an accountant, you will need to hire one to adequately produce accurate, detailed financials that are recast and complete. Since the numbers in your profile letter are a summary only, your financials in the offering memorandum need to be very detailed and defendable.
If they are not, do not send out your profile letter until the offering memorandum is finalized. There is nothing more damaging to a deal than to have numbers revised after the buyer has reviewed the profile letter. Again, reducing perceived risk is the key in all your documentation but especially so with your financials. Take the time and spend the money to get them right.
Some final thoughts: Keep your profile letter to no more than two pages. Try to keep it between 200-250 words and avoid too little or too much information. In general, bullet points work much better than long paragraphs with no gaps. Remember this is summary of your 60- to 100-page offering memorandum, it is top level info and needs to be attractive to the eyes of a professional buyer who will most likely look at dozens of them the day he/she sees yours.
Finally, be very, very careful to not disclose the company name and ensure that you do not provide so much information that a well informed buyer can determine the name of your company. This is a fine line to walk, but do not disclose your businesses identity UNTIL you have a signed non-disclosure agreement in hand (NDA). If you are not working with an M&A advisor, you will need to have your attorney craft an ironclad NDA that protects you and your business from prying eyes that simply want to steal information about your business. So make sure that your teaser doesn’t provide too much detail.
Of course a buyer is going to want to have some idea of where the business is located so say something resembling, “Located in the upper mid-west, the company is one of the oldest distributors of roofing products in its market, representing more than two dozen manufacturers and capable of supplying a full range of roofing product needs.” That is general enough to give the reader an idea of location and business direction without disclosing too much.
And before sending your letter out, have someone you trust edit it. It is amazing how mistakes can slip through your own review and what a second set of eyes can pick out that you may miss after countless reviews!
Unfortunately I am only able to scratch the surface of this topic today. If you would like to learn more and even see samples of what a profile letter looks like, I recommend that you attend a Generational Equity M&A seminar. While there, after a few hours of your time, you will have a significantly better understanding of how to create all the documentation you will need to present to buyers, including the teaser.
And if you are forced to find buyers on your own, be creative as you produce your teaser and make it informative and interesting to review. As they say in showbiz: Always leave them wanting more! Make a great first impression!
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2014 Generational Equity, LLC All Rights Reserved
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
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