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What Should My Confidential Business Profile Include?

By Generational Equity

08/27/2018

You know the old saying: You only get one chance to make a first impression.

Although this applies to quite a few areas of life and relationships, it is especially germane in the M&A world. If you are selling your company, you will need to approach your targets with an initial teaser, also known as the Confidential Business Profile (CBP) to make that first impression meaningful.

For the buyers on your list, this document is the initial introduction to your company. As such, it needs to provide enough detail to catch a professional buyer’s attention (keep in mind that they see hundreds of these annually), yet written so that you don’t disclose confidential details about your company.

At this point in the process, they will not have signed a Non-Disclosure Agreement (NDA). This is a very fine line to walk and is one reason why we highly recommend you hire an M&A advisory firm, like Generational Equity, to help you manage your exit journey.

But if you decide to forego the advantages of hiring us, here are some very helpful tips from our friends with Axial about creating an outstanding Confidential Business Profile, one that helps you stand out to buyers when selling your business.

Axial is an online community that connects business owners from start-ups to third generation companies with capital providers. To come up with these ideas on how to create a great Confidential Business Profile, they actually reviewed nearly 9,000 teasers that had been loaded by their clients on the site from 2012 – a pretty healthy sample size!

Creating an Outstanding Confidential Business Profile

Here are a few of Axial’s findings for creating an exceptional Confidential Business Profile that will help you attract the attention of buyers when selling your business:

  • Titles on the teaser are critical. Six to ten words tend to get the greatest pursuit rates. Also, avoid overused words like profitable, new, global and innovative.
  • The description you provide for your company is vital. The higher quality the writing, the better chances you have of getting a reply. Graduate level writing is highly recommended (another reason you need to hire an M&A advisor). 200+ words is the preferred length, and use bullet points as much as possible.
  • Include complete top-line and bottom-line financials. It is best to provide three years of recast financials and a 3-year projection based on them. Using at least three years increases your pursuit rate by 54%. Of course, the data must be accurate, and it is best to round off to the nearest thousand not millions. According to Axial, the pursuit rates go up dramatically if your EBITDA is stated as $2,136,000 vs. $2.1 million.

In addition to Axial’s analysis, based on our years of successfully creating great Confidential Business Profiles, we would add:

  • Try to keep your CBP no longer than 2 pages, 3 max. Too many business owners try to provide their Offering Memorandum as part of the teaser and that usually backfires. Remember that the professional buyers you want to attract look at hundreds of these a year. You have about 5-10 minutes to catch the attention of the person reviewing them.
  • Know why you are approaching a specific buyer with your opportunity. It is very important to do your research before sending any profile out and determine who would have the most interest in your company. Look for buyers that have made acquisitions similar to your company in the past 3 years and investment firms with holdings that are synergistic to your business.
  • Most importantly, as mentioned above, it is critical to “recast” your financials. If this term is new to you, please learn more about how to recast your income statement and balance sheet by reading our post, “11 Essential M&A Definitions for Business Owners.” Once more, recasting is a crucial art and a science for selling a business, and having an M&A advisor by your side to do it can make a huge difference (especially if you are not an accounting wizard).

Have You Prepared Your Confidential Business Profile?

Hopefully by now you have a better understanding of how important your CBP can be in selling your company. Professional buyers are looking for teasers that have a standard format and that use specific keywords to convey meaning. They don’t like fluff and useless hyperbole. And above all, be accurate. Nothing can destroy a deal faster than data that is wrong.

If you would like to learn more about CBP creation and all the additional documentation you will need to market your company effectively, you should attend a complimentary Generational Equity exit planning conference soon.

These are designed to give you significant information that you can start to use right away to help sell your business for maximum value. Of course, we will also give you the chance to learn more about our services should you want to hire a professional M&A firm to represent you. The choice is yours, but we provide you with the information to run your exit process confidently.

If you are interested in attending or in just learning more about the conference, follow these links:

And remember as you create your Confidential Business Profile: be concise, accurate, and creative. This will help you attract the buyer interest your company deserves!

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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