EP 113: Tools of the Trade: CIMs

Ed Mysogland  0:20  
Welcome to another edition of the defenders of business value podcast. I'm your host, Ed Mysogland. And today we're talking about Sims and Sims. It's CI M, it stands for confidential information memorandum. And that is the primary document that buyers review from sellers that has their information, no information about the business. And that sim and other people call it confidential business review. Others call it PitchBook the book prospectus but for our purposes, we're just going to call it a sim. And the purpose of the SIM is to provide a comprehensive, confidential, well structured document that facilitates information about the business that prospective buyers are going to want to know. All the while while protecting the sellers, proprietary and sensitive information. So this thing this thing is, it's one of two documents that drive the sale for for any buddy in the deal space. So the first one is a teaser, and the second one is the SIM and the sim, you know, it's intended. Let's talk about its purposes. So one, it's confidentiality. Alright, so as the name suggests, the sim is designed to maintain confidentiality. It's the it's the first introduction of the business to the buyer. And that sim should answer 75 to 80% of any normal buyers questions. And we already know, you know, anybody that's been in the business for any period of time knows, just kind of the standard questions. And then every business is unique, and those additional 20 25% You know, need to be augmented. Okay, so it has some, but not all information. This is not intended to be due diligence, it's intended to be pre due diligence, so it's going to have enough information about the business to help them establish a value and be whether whether or not, this is a viable candidate for acquisition. The next thing, it's a marketing tool, all right, a well done and comprehensive sim will help the buyer accelerate the purchase process, and it will demonstrate your command of the business it you know, we have, we have certainly seen that a well prepared Sim can make a business more appealing to buyers by highlighting the strengths and opportunities and competitive advantages. So well done document actually helps the sale and helps accelerate the sale. And then lastly, it helps with pre negotiations. Alright, so So the sim cam form initial information that the buyer and seller are going to refer to during their their interaction and this will help streamline the negotiation process and so that's why it's so important to have good clean financial statements as well as accurate information. So, the So, so it facilitates the negotiation, if further down the process road. Alright, and then lastly, I want you to remember, I mean time kills all deals, this if this document is well prepared, it will save you a massive amount of time. Okay, so now let's, let's talk about what all the sim contains. So it has an executive summary. It has a business overview, industry information, operational overview, financial information, customer information, marketing, human resources, technology growth opportunities, assets included in the sale, at times, they're, you know, this is kind of an optional one, you know, the terms of the terms of the deal, you know, what kind of transaction Are you looking for? And then lastly, you know, an appendices that have the supporting information. Alright, so let's let's begin with the executor Summary. So the executive summary is is really super easy. It's, it's how would you describe your business to, to some to someone you just met. And you want to talk about, you know, its track record financial performance, operational foundation, I mean, it's, it's really just an introduction like an high level overview of of your business, it is truly that simple. So then we move into the business overview. Alright, you want to talk about, the first thing is, is the founding story? You know, how did you get into it? If you bought it? Or if you started? And when did you start it? And if you acquired it, you know, describe why you bought it, and the history from the time you before you bought it till the time until now, and any particular milestones, you know, that's the next thing is is is the milestones of of achievements of the business? And maybe you're saying, Well, you know, it doesn't, for me, it's, it's no big deal. We don't really have milestones, well, every business, there are certain things that you remember about your business. And I think you should include that. So some of the milestones I think you should include would be, you know, something that happened, that considerably grew the business, you know, I would include when it was founded, if you have any particular point products or services or new products or services you introduced, I would put that any key customer wins or significant contracts, I would, you know, if you expand it into new markets, or into new new geographic regions, if you've ever received any awards or recognitions, if you've had any acquisitions or merged any companies in with yours, and then any kind of innovation that you might have, I would then talk about your your market. And so, you know, I think any buyer wants to kind of understand what the market trends are. So if you've, if you're aware of any market trends that are going on, because the buyer will find out, I think it's important to put that out any strategic shifts in the business in the business? Has the business model always been the same? Have you always offered the same product or service? Are you still targeting the same type of customers? Then we move into an overview of leadership and personnel changes? Who, who, who runs the day to day? Are there any key hires that that that made a favorable impact on the business? You know, have you reduced any any personnel? You know, the technology is, is displacing some people, as you know, if so, you know, what does that look like? Have you had any acquisitions or partnerships, you know, just the the rationale behind them, and the outcomes that they achieved? Any kind of technology, I would discuss any kind of commitment to technology and innovation that you've made. And if there's anything proprietary within your business, you do certainly want to talk about it. I'd also talk about brand reputation, you know, does the company's reputation, you know, in standing in the industry, what does it look like? Because, again, buyers will find out. And then lastly, our last couple things, you know, has it always been in the present form? Like for example, you know, some some people change from a C Corp to an S corp or from an LLC to an S, you know, what hasn't always been in this form? And then, then the last question is, what what have you failed to? Do? You know, that you got into this business? What had you hope to do that? Perhaps you hadn't done? Alright, let's go to the industry review. So when you're evaluating an industry, you have to establish who do you serve, you know, what's going on in the industry, and you can you can find that through IBIS World or your public library. There's a there's a lot that as well as trade magazines. So I think a general statement of this is the state of the industry. Are you in a in a growing industry or or a maturing industry? Or is it new, and you know, it's kind of a big land grab, but you want to address kind of the state of the industry? And you may say, Look, I don't know what the state of the industry is, and I understand that but I do think that that you have a lot more understanding than the buyer does. And so if you're following any kind of trade magazines,

Ed Mysogland  10:05  
or industry intelligence, you definitely want to include that. So you want to talk about, you know, just the growth of the industry, because, again, the remember, business valuation is about is, is about growth. So if you're in a dying industry, you know, we may have to consider how we're going to market this, given the declining of the industry, do we have enough time for us to, to, to get our money out. And that may not be, that may not be a good thing. So you do want to get your arms around that not all lists some sources that you can go to, to kind of get a clearer understanding of, of your industry. Alright, so now let's talk about an operational overview. Alright, this is this, this area, the buyer wants to understand at a high level, what you do and how you do it. I know you don't want to give away any trade secrets or anything like that. But they do want to understand, you know, how the business operates. So we'll first begin with an outline of the operation, alright, any kind of key stages or key steps that that you do to deliver your your products or services? That's what they want to do? And you can you can easily just put this on a piece of paper and draw out, you know, this is step by step by step. And next is operational structure, you want to describe the organization structure in the business, what's the hierarchy? You know, this is essentially an organizational chart, you know, and we'll talk more about that in the employee section, but operational structure who's responsible for what in the process? If you have inventory? You want to talk about your inventory management? How do you manage the inventory, including ordering and restocking procedures? Next, you want to talk about your supplier relationships? All right, who are they? You know, is there a lot of them? Are there alternatives versus what you what you currently have that that's a big issue, a concentration of one supplier without the prospect of additional ones, increases risk and decreases your value. So you want to highlight any kind of supplier relationships that, you know, that are diversified in nature, as well, as you know, if there's any cost cutting, or UPS or cost savings measures or exclusive supplier partnerships, you want to talk about that. Next, you might talk about quality control, how do you control your quality? You know, what's the oversight? Is there anybody paying attention to what's going out the door? Because a buyer will want to identify if there's any kind of efficiencies that could immediately be implemented to improve the cash flow margins. The next thing is cost controls. What do you do in order to control costs? How do you have? Do you have mechanisms in mind? Or in the business that will help the buyer understand through your financial statements? You know, where are the controls? And is there opportunities to further control the costs to improve the margin? Next, we want to talk about KPIs. KPIs or key performance indicators. If you have any kind of KPI in your business. You know, a lot of people are like look at I just know, if we have a profit at the end of the month, that's my KPI. I get it. But some, some are looking at leads, some are looking at funnels, some are looking at, you know just just how many how many leads are coming through the door, what's their Google ad spend, you know, different things like that there's KPIs for every business, whether you whether you know it or not, but whatever you're paying attention to in your business, you want to share it with the buyer because they want to pay attention to it to. Next under operational overview, you want to highlight the scalability and growth potential. Like I've said it 100 times business valuation is about growth. So if you can lead the buyer to water, this is how you would grow this business that will help. You want to address any kind of competitive advantages you have. And from an operational standpoint, you know, whether it's costs, whether it's spirit technology or unique capabilities, you want to describe those. And then lastly, you want to talk about operational challenges. If there's any kind of challenges that you've fixed. barons, you know, beyond just the the day to day of being a business owner, you want to share that with the with the buyer. Alright, next we're gonna move into financial analysis, every buyer is going to spend a lot of time here. So you want to include your historical financial statements. So this is This includes your income statement, and balance sheet and a seller's cash flow analysis. And you will, we'll talk about the valuation here shortly. As far as how to calculate seller's discretionary cash flow, all right, you want to include your interim financial statements, the buyer will can consistently asked for this, you know, if it ends the month, whenever you close out a month, you want to supplement your Sim with the most current information you have. And if it's over the over a year end, just anticipate that the buyer is going to want to see your year ends, as soon as they're available in the tax return as soon as that's available. If you in QuickBooks, you can do a year to year comparison. If you if you have that ability, that's a really good way to to highlight what's going on. Detailed revenue breakdown, what are your revenue streams? Super easy you in QuickBooks, it's very easy to identify, you know, what? What's the revenue? And what is it comprised of is product service combination of both, but you just want to break that down. And then expense analysis, right, what you want to highlight any kind of major components and the typical ones or cost of goods sold payroll and rent. And if there's any forthcoming changes in those expenses, you want to establish working capital, you know, every business, every business, there's two checks that when you when you acquire business, the first check is to buy it second wants to for the working capital in this case, we need to have a clear understanding of what is it take to actually run this business. Next, we want to have our EBIT dA. So earnings before interest, taxes, depreciation, and amortization and our adjusted EBIT, da and again, we're going to talk about that here shortly, but but for the most part, everybody wants to know how, how am I going to pay myself pay any kind of debt and get a return of an on my investment and doing that analysis will will guide you to that. Next is capex capex stands for capital expenditures, you want to you want to include, you know, how much how, how much do you have to put into the business in order to, you know, to keep the equipment running optimally, like, for example, we have a we have a, an equipment rental business, well, you know, their cash flow is a couple million dollars, but, you know, each year, they're, they're having to put tons of money into the equipment. So the depreciation expense that they're taking, is really not the pre is, is really not depreciation, it's deterioration. So, we back that out. And we don't include that in our cash flow analysis. Because we know that that's just the tax, that's just the tax thing. We have to we have to go back and continue to reinvest into the equipment if we're going to continue to sell it. And then, you know, if you have any, any understanding of financial risks, financial risks, meaning customer concentrations, market volatility, any kind of regulatory changes, you want to share those, and then like the last section, if you know of any growth or, or a strategy that you know, that the buyer should entertain, this is a good place to start and share that.

Ed Mysogland  19:13  
Okay, so the initial information that we just discussed, I mean, everybody seems to understand why, you know, the, certainly buyers gonna want to talk about financials and, and things like that and, and how the business works, and so on, so forth. Now, now, where we're going from here, like customer analysis, this is where we're going to begin. I mean, that that is really important. And you're going to say, well, that's, you know, that's kind of invasive into the business and it's true, but I want to kind of walk through you know, some some questions that the buyer likely will be asking of you, and why and then its impact on value and how you can how you can prepare for it. Alright, so customer demographics, you know, so who is the customer base? Can you provide any kind of segmentation information? You know, where are they located? Who they are, you know, just what do they look like? What's the avatar? What are the demographics? Was the geography? How do you collect data? So then why are buyers asking that? Well, they want to, they want to try to assess the market and the scope of the of, you know, how wide is your net, as, as it relates to, to, to obtaining customers. So its impact on value is that, you know, the more diversified customer base, whether it be in in type of customer geography, you know, the, the size, you know, the, the less, I should say, the greater the greater, favorable impact on value? And then how do you prepare? Well, you're gonna have to understand, you know, your customer and where they come from, you know, next let's talk about customer base and loyalty, you know, so who are their key customers? How are they diversified? And, you know, is our retention rate? You know, some people call that churn, you know, how many, how many customer? You know, you're, you're replacing customers, as you're losing them, you know, what is that churn rate? And do you have any kind of long term contracts, so buyers want to know this, because having a state predictability, you know, stability and predictability are keys to, to, to keeping business value? High, right, so a loyal and diverse customer base will considerably increase the business's value, because it lowers the risk, and you have stable earnings. So, again, back to the same thing, the more predictable the less risk, the less risk, the higher the value, how do you prepare, you're going to you need to have your your arms around, you know, where your customers are coming from and who they are. So next, let's talk about revenue sources. So what is the what is the primary sources of revenue? Are they if you have multiple services? Is there a service that leads the way? You know, how does that how does that look? And then buyers are going to want to understand the consistency of these revenue streams? And what's the likelihood that they're going to continue to be as they historically have been? So the impact on value is that consistent diverse revenue streams can lead to a higher valuation? And then how do you prepare your financial statements, you should be ready with some financial statements that breaks down your revenue, you know, where it's coming from. Alright, next is market position. So, you know, how does your How do you make your business stand in comparison to the market, what makes you different, so buyer want to understand your your position, because it helps them understand the current market share your competitive advantage, and where they're going to be able to go in order to grow the business. So a strong market position, as it relates to value is a clear competitive advantage, you will increase the value of the business. You know, understanding who your customer is, and why they come to you, increases business value. Next, let's talk about customer satisfaction. So questions are, you know, how do you measure customer satisfaction? You know, and do you have any kind of examples? So, why buyers want to know, you know, they are undoubtedly looking at Google reviews, you know, and looking you up on the internet. So, so it customer satisfaction directly indicates the business service quality. All right. And, you know, the let everybody has bad reviews, I mean, zero question about that. So, periodically, you need to be in a position to answer what led to that poor review. So you want to you just want to get get your arms around, you know, what's being said about you on the internet. So next, let's talk about the relationships. So what key business relationships and partnerships do you have? You know, if you have these relationships and partnerships, what's the likelihood that they're going to transfer to the buyer, it becomes really, really important for the buyer to be able to assume those types of relationships. So if if they're tied to the business owner, film that's going to impair the value a little bit. So how do you prepare, you're going to want to do detail any kind of partnerships or relationships that bring value to the business such as suppliers, distributors or industry collaborators? So any kind of customer challenge, you know, challenges and risks, you know, the the biggest challenge that you have is alternatives. Where else can your buyer get the service that you serve product or service that you provide? And the buyers want to understand that, you know, what's the likelihood that you're a flight risk? And where are you going? And how do I retain you. And so the ability to understand why a buyer continues to work with you will reduce the impact that you know, any kind of impact on value. And then preparation, you just got to be honest about the challenges that you experienced? I mean, every business has it. So you might as well be honest about it. And because again, the buyer will find out. So now future growth opportunities, you know, how does the business grow? How are they going to either? How do you? How does the buyer either expand its customer list, sell more to its current customers, or attract new customers? Therein lies the whole, you know, the cornerstone to all of these questions is growth of the customer. How do I do that. And so understanding, understanding all of that will certainly help you increase the value of the business or at least maintain the value, if the more you understand your customer, the more you understand how you might be able to how the buyer might be able to capitalize on the on their customer base or grow it, the greater likelihood that you're going to get a premium value. So again, this is all about risk, the buyer will never buy a business, if they don't understand the customers or why they do business with you. It's just too much of a risk. So this is a real important one. Alright, next, let's talk about marketing. So you know, we get a lot of pushback on this. I mean, it shouldn't, it shouldn't be too difficult. I mean, we're, as a buyer wants to know what you're using for marketing, you know, so, so what's your collateral? You know, when I say collateral, print information, digital collateral, websites, email, templates, sales, collateral, what do you what are your leave behind? If you have scripts, promotional collateral, but posters, banners, and such branding? What what logos do you use and typography and colors and brand identity? They want to understand the like, like, with customers, they also want to understand the revenue breakdown, you know, when you create a sale? Where's it coming from? And what's what's what does it look like? What has it looked like over the last several years? Is there you know, Can you can you break down the revenue by by source of revenue? That's really important, is there any seasonality to it? Sales and Marketing want to, again, like the last section, talk about, you know, understand where the, the, you know, who the customer

Ed Mysogland  28:26  
you know, who the customer is customer base is? And why, you know, is there any kind of concentration? You know, do you have any kind of KPIs, and the, like, sales channels, you know, describe your sales channels in strategy, which include your sales, team structure and performance metrics, you know, how do you reach your customers? That's the main thing is how, how does this How does your business work, your marketing strategy, and again, by the way, view, some of this you do not have to pony up, I mean, it's not like you're not going to, at some point, we can phase out, we can face the this type of information out to the buyer, because you might be sitting here saying, you know, I'm giving up the entire, you know, everything about my business. And, you know, I don't know if I have a deal and that's true. So you, I mean, some of this stuff, we we want to be sensitive that we're not giving away any kind of proprietary information, that would give a potential buyer a competitive advantage if they went out and opened a shop or bought another business like yours. Alright, back to this. We also want to know the tech stack, you know, on sales and marketing, what do you use it what platforms are you using to generate? You know, to house the information, you know, what CRMs and such? What email marketing service, do you use things to that effect that generate marketing and sales? Then we talked about reviews Um, we want to talk, like I said, in the last one, you want to know what's being said about you on the internet, you know, whether it's right, wrong or indifferent, you do need to at least know what's going on out there, because the buyer is going to, to certainly get, you know, get their arms around it and want to know, why did you get that one star review. So that is marketing and sales. Okay, this next section is about people, human resources. And this is probably the most sensitive information, you know, we talked about customers and customers, indeed are sensitive, but as far as employees you want to make first and foremost is sanitize. When I say sanitize, that means no names, no names of, of anybody that's in the business. And same thing with customers, you just use industry, like, you know, for example. Like in our community, there's a large pharmaceutical called Eli Lilly, well, you can you can say, you know, public pharmaceutical company, you know, it may be Lily, it may be 100 others that are public companies. Alright, so back to human resources, everybody's going to want to know about, about people. And so so when we talk about it, let's talk about the potential questions like, you know, who, what kind of skills and experience are required to work at your business? All right? Do you have any kind of turnover? What's the likelihood? You know, where do you find people? Are there any key employees? And what are their roles? You know, how do you keep them? You know, How is customer? Customer? How is employee morale? And what is the culture? Like, you know, do you know, is it a eat what you kill kind of environment? Or is there? You know, is it, you know, one for all All for one kind of environment? Any kind of employee related legal challenges, meaning, has anybody sued you for wrongful termination or things like that? And then what's the salary structure? So, why do buyers want to know that? Well, they, again, they want to, they want to figure out, you know, they're trying to assess the skill and stability of the workforce, if I have to go get more people, where am I going to find them? They want to understand the key personnel. So when you leave, who is going to run the business? You know, who are these key people that might either be developed up into a nother level of management? Or who are these people that, you know, might be flight risks? Alright, is there a cultural fit? You want to understand? Is there Do you have a particular culture, like, you know, there's, there's companies that we've seen, where, you know, that company is really a family. And, you know, some have family members, and that's true. But others, I mean, they've worked together for a long time. So this is going to be quite a transition. And you need to understand how do you how will you fit into that culture? You know, the buyer is going to want to know that, you know, do you have any kind of, you know, every buyer wants to know about the legal liabilities, and what's the ramifications and any other financial obligations associated with the workforce. So now, impact on value. When we talk about that, you know, the employee expertise and stability, again, high, high turnover, will certainly suggest a lower multiple, because it's higher risk. You know, do you have any kind of key employee that you're dependent on? Is there any kind of reputational risks, you know, and we talked in the last couple sections, is that you want to perhaps, you know, make sure that you understand what's being said about you on the internet. And then lastly, any kind of any, any other financial commitments that you need to, that the buyer would want to be aware of? So how do you prepare? Well, first thing you want to do is have an org chart, here's everybody in the company, here's kind of the, the how they all stack up your employee documentation, you know, after you have payroll records, you want to keep those handy, because at some point, you would you would like to, to be able to furnish them in a timely fashion to the buyer at the appropriate time, you want to if you do have high turnover rates, you want to you know, address why, you know, you want to be in a position that that that It may be the nature but here's how we solve this problem. If you have, you know, comp and benefits, you know, if you've done any market analysis, this is, you know, here's kind of where we sit as compared to our competition. And then you want to communicate, you know, if you do have a culture, how does it contribute to the company's success? Next, you want to talk about training and development? Are you are you helping your, your employees get better, and if necessary to talk about health and safety, do your any kind of plans that are in place. So that's about the about employees. Now, let's talk about you. Like, if you are the business, the buyer wants to talk and understand about, you know, the business is going to continue to operate without you. So the customer, you know, they want to understand how dependent you are, from an operational standpoint, from a customer standpoint, from an employee standpoint, from a supplier standpoint, and from leadership. You know, if you're that person on all those fronts, you know, the risk is fairly high to the buyer, because you're, you're in all those roles. So what are you? So what questions will the the buyer ask, you know, describe your day, your day to day operations? How do your customers perceive your role? Have you ever taken any kind of extended absence, or vacation or something more than just a week? Now? Who are the key relationships in the business? And then any, can you describe any kind of business, any strategic business decisions that are being made? Without you? And so how do you mitigate that risk, you need that strong second tier management, and you may not have it and that's okay. Again, if but if you do have the time to address some of these things, I would suggest that you do it, if you can systematize the operations so that the buyer understands the you know, just, you know, how the business operates. As a system that would be helpful. Transitioning key, any kind of relationships, from you to the next to, you know, so key person on your staff, that's really important. And then you need a detailed transition plan. You need that plan. Regardless, you know, if something does happen to you, what what are you going to do with the business? So, so that's, that's a, certainly an important one. And, you know, there's more, I mean, you know, we're trying to address every, every issue, that the,

Ed Mysogland  38:00  
that the buyer may ask you, but each buyer dif differ. So, anticipate, we certainly hit probably 80% of them, but anticipate there'll be more. Alright, so now let's talk about technology. So potential questions from the buyers, or what kind of technology do use now they want to, they want to know, you know, the, the biggest thing is, if you have proprietary technology, and that's either really good or really bad. So it's really good. If you know, you, you're able to if you if you have proprietary, proprietary technology that that makes your business humming along. That's great. The question is, what happens when it stops does the whole business model apart, and a lot of businesses that we work with, that is indeed the case. So if you but if you're using, you know, some off the shelf, perhaps customized a little bit, you know, that's not a bit, that's not a bad thing that actually helps the, the, the buyer because they can capitalize on what you're doing with off the shelf products. So, next is how integral is your technology to do the business? Ill like, if you're like any business, like mine technology's really important. You know, what's next is what's the state of your online presence, you know, everybody wants to know what what what do you look like, you know, not only in the marketplace, them in real life, but also digitally. Next is how do you handle security and privacy? And is the technology that you're using can be scaled, meaning can can grow quickly. So so how do you prepare you just the number one you need to to document your technology? You know, If you do have, you know, you do have to invest in, in, in technology, so if you have antiquated system, like an antiquated database, like in my case like we do, you know, it is it works and the pain associated with leaving, I know, but as far as would somebody, like if someone was looking at our business, would they find it attractive given the platform or use, I'm gonna say we're probably experience a somewhat of a penalty. So you want to next you want to optimize your online presence, you want to make sure that you're protecting data. You do want to understand the you do want to understand how technology works in your business, not that it's just part of the business, but how does it work, you having thought through all those, all those areas of technology, the buyer likely is going to pick up right where you left off, unless it's a large buyer, and then they probably assimilate your tech into theirs. But regardless, having an understanding of how it works, will certainly mitigate that risk. The next section is talking about growth, every business owner, or every business buyer, I should say, is going to want to know not just what the business is today, but what can it be in the future, you know, what's the likelihood it can grow to be bigger and more profitable than it is today? And so and so, when you're talking to the buyer, you know, you need to? And maybe you do maybe you understand this? And maybe you don't I have no idea, but you do want to, if you do understand it, you need to understand you need to be able to communicate that, how would you expand the market? Where what product or service innovation would you undertake to increase the business? You know, what kind of customer base diversification, you know, should you be doing right now? And the next is, you know, layering on new technology, would that help? You know, is that the growth that we're talking about? And then lastly, you know, are there partnerships that can be established that we want to, that would help grow the business. And so you want, you want to get your arms around around that because you know, they're going to do their own research. But if you can share some of the tools and resources that you have at your fingertips, about, you know, this is how I would grow my business, if I had another 10 years, I think that would be very helpful to to the buyer. Alright, next we're going to talk about the asset list. Every buyer wants to know, what am I buying. So, so quite frankly, this is super, super easy. You want you want to create a spreadsheet or get up create a table you can even handwrite it, you want include the make model, your manufacturer and any unique attachments, features or capabilities of that piece of equipment. You want to establish what kind of condition it is and don't say it's like new when it's probably in fair condition. You want to be honest of this condition because chances are there's going to be an equipment appraiser that's going to come along and size it up. You want to to also talk about you know, are there any kind of maintenance and repair records that you have, you know, that you know, especially for those that are in manufacturing or trucking for example, you know, that these things become really really important, you know, any kind of replacement or upgrade history, we know in a lot of trucking companies you know, the the engines have been you know totally redone and it adds life to the to the asset. So, you want to be able to talk about that and then is there any kind of you know, what kind of lifespan remains on the current equipment and by just saying you know, if you keep if you take care of it will run forever, is probably not the answer that any buyer wants. So, you want to you want to be able to what this buyer is trying to figure out is okay if I buy the business today How long before I have to start reinvesting in equipment in order To keep it running, that's the ultimate question. As far as the detail of, here's a listing of my equip of my equipment, every bot buyer is going to need that from an asset sale standpoint, as well as any kind of bank for to establish their collateral. Alright? Lastly, tours of the business, you want to, to make sure that you want to make sure on this that you talk about how a buyer will see the business, you can you can do it over zoom, you could you could get a lot of these questions answered. But at some point there, they're going to want to come and see the business. So you might as well address it in advance how this is going to work. So first, you know, you need at least a couple of days notice before before anybody is going to come visit, you need to establish when they're coming to visit, is the time, you know, is it going to be after hours is going to be during working, working, you know, during the workday, the next thing is check in, who are you going to meet with? Are you going to meet with you the business owner? Or who is going to? Who are they going to meet with and the biggest thing is you just don't show up at the front desk and say, Yeah, I'm here to look at the facility kind of thing. That's what you're trying to avoid. The next thing is time limit. You know, it should, you know, most busy you can walk the floor of most businesses within within an hour and that it's only for for, for the buyer to see it not necessarily to stay in ask a bunch of questions. Next is the buyer should understand that there's no disruptions, you're you're not there to disrupt anyone or anything, the dress code you want to be, you want the buyer to understand that, you know, if it's, you know, everybody in your your places wearing jeans, and, you know, a company t shirt, you know, that's one thing, you know, showing up in a suit is going to do nothing but draw attention to them. So So have them dress appropriately. Number Number six is again, this confidentiality is really important. So make sure everybody understands that you're not going to we're not going to be talking about sensitive information about the sale of business here on the floor or anywhere work. An employee or customer could come here. Next is employee interaction. Absolutely no, no, you're not going to interact with employees unless the less the seller says so.

Ed Mysogland  48:00  
And again, this is about observationally. So, so refrain from interfering with day to day operations. And then lastly, don't video tape don't take pictures. You want to make sure that they're not going to take pictures or record anything without your permission. So that is the tours of the business. And then the last section is super easy. is a frequently asked questions. So you're going to your as a seller, you're going to hear the same question over and over and over and over again. So why not just cut cut to the chase and create a section of questions and the answers that you you consistently continue to hear. And then that that'll do it. That is how that's a sim. That's how you create one and that is what you should expect from one. So I hope you enjoyed this episode of defenders of business value and we'll see you next week.