(Extracted from ‘How to Sell A Business‘ book)
Why write a business sale teaser letter?
The purpose of the teaser letter is to make the market aware that your business is ready to be acquired, should the right opportunity arise, and to identify potential interested buyers.
It is generally a two page document, which is written by your business broker (as one of their agreed deliverables for their fee) with your input, to showcase your business to potential interested parties who may or may not be actively acquiring businesses at this precise moment in time. The letter will most likely contain the following:
- The broad type of business it is
- Your headline financial figures (profit, revenue)
- Reason for sale
- Outline the opportunity without mentioning names
- Specify what type of transaction you want, ie. full sale, investment, management buyout
- Your broker’s contact details to request more information
The teaser letter should avoid stating an asking price or even a range. You don’t want to put someone off before it’s even begun. If you would like to see a teaser letter in all its glory, we have an example here.
Depending on the potential buyer’s organisational structure, your broker may make a call before sending out the letter. The letter is normally sent directly to the managing director/chief executive, to the financial director, or to the acquisitions manager/director.
What happens next?
After sending out the teaser letter, your broker will follow up with a call to find out if the potential party is curious and interested and what attracted them to your business. This allows your broker to discuss the opportunity in more detail and qualify the interest of the potential buyer some more. If your broker is not familiar with the interested party, they will check up on the company’s financials and work out if they have the means to pay-out, as well as see if there is strategic value in the potential acquisition. If the party is still interested, the broker will send the potential buyer a confidentiality agreement (a.k.a. a non-disclosure agreement) to sign before releasing further details.
Joanna Miller helps business owners navigate their way through the start to finish process of selling a business. Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”