Offering Memorandum or not?

sarahsodapop wrote: I work for a small, family owned rental business and the family is looking to get out. They want to sell everything about the company (the current rentals, inventory, trucks, name, etc.) except for the land that the production facility sits on and the executive management.

We have been told by brokers that we need to do an Offering Memorandum to send to the corporations that will probably make an offer, but all the OMs I've seen relate to stock sales & raising capital. I've seen references to representations and warranties: are these in lieu of an official Offering Memorandum? Where could I find a template of something like this, and how do we know how much information to put in this initial packet?

Thanks for any help,
Sarah

No OM is required to sell a company. OM's are for companies trying to riase capital by selling stock.

What you want to put together is an Information Circular. As you are selling a going business, it will detail everything about the business. Assets, cash flow, liabilities, etc. It will also contain the terms and conditions of the lease that you are going to enter into vis a vis the land and buildings. You could also sell the buildings, and lease the underlying land. As to not selling the 'executive management', I'm not sure what you mean by that. You can't 'sell' or 'not sell' management. Anyone buying a business would normally be bringing in their own management.

Gordon

Re: Offering Memorandum or not?

It really depends on the size of your business I have been involved with large transaction where there is a large offering proposal put together which is usually a teaser to get you to put a non binding Letter of Intent then you go into the due diligence phase. On smaller transactions usually a quick write up is all the is needed and you usually develop an Asset Purchase Agreement before you get into the due diligence period with some carve outs if you find some things wrong in the due diligence period.