Twenty years ago, a “book” would be something like a private placement memorandum, and could be 75 to 100 pages or more, describing in excruciating detail the business being offered. For better or worse, in the past 10 to 15 years, books have morphed into 10 to 15-page slide decks providing a broad outline of the business being offered.
Large companies will still often prepare 25- to 50-page decks, but you just don’t see those in M&A transactions involving small companies. The typical sections, and now they nearly constitute all the pages in the deck, are as follows:
- Brief overview of the company
- The core problem/challenge/need facing your customers
- How your company uniquely and powerfully addresses the core problem/challenge/need
- Product or service description
- Your business model
- Market overview
- Overview of your people and organizational structure
- Financial overview (i.e., summary historical (three years) and projected (three years) income statements and summary current balance sheet)
- Contact information
A writer of a very long letter many years ago, and it’s not Mark Twain, despite the stubborn belief of many, said, “I’m sorry this letter is so long, but I didn’t have the time to make it shorter.” This is so true with sell-side books. You want it to be brief. And you want it to be good, which usually means focused, conclusive, accurate, and engendering of greed or fear. In other words, you want it to be a powerful sales pitch.
Each page should make no more than a point or two or three and have a lot of blank space. A lot of meandering text does not make a potential Buyer want your business more. In fact, it is serves as a deterrent.
So, how do you actually prepare this book (and the teaser, discussed below)? If you are marketing-oriented and a good writer and presenter, you may be able to do this yourself. But, in reality, this is where you need an experienced investment banker. Here is where Newport’s transaction advisory team can help you immensely.
Off of this slide deck, Sellers, or more likely their advisors, prepare a simple, one page “teaser” that summarizes the information in the deck, but does not use proper names and, generally, does not disclose detailed financial information. The purpose of the teaser is to pull people into the process who have a genuine interest, but not provide too much information. The sale of a business involves stages of commitment by a potential Buyer. At each stage, he, she, or they are looking for a reason to walk away. Your job is to provide enough information at each stage to get them to the next stage, and not so much that they walk away.
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