Your M&A offering document should begin with an executive summary that follows the same rhythm as your high school English papers: Start big, narrow your focus, introduce the thesis, prove the thesis, and conclude by widening narrative.
The executive summary is the big picture overview of the offering document. It includes the thesis, Seller’s rationale for seeking a deal, and some thoughts on the type of transaction Seller would find agreeable.
The thesis is your central argument — the value proposition for Buyer and the aspect of the deal you want to tout. When you’re selling a business, you need to have a thesis; you can’t maximize value in a transaction unless you provide Buyer with specific examples of the value she can gain. Seller’s thesis should be Buyer’s opportunity.
Highly profitable companies are often best sold based on multiples of EBITDA (earnings before interest, taxes, depreciation, and amortization); the industry standard magic number is five times (5X) EBITDA. It’s the easiest valuation technique for Buyer to understand (and obtain financing for), but there are other options as well.
You don’t need to limit yourself to a single thesis; feel free to pick and choose more than one.
