Creating a Sales Memorandum: Word vs. Powerpoint

Source: MSFT

Which is more effective for a Sales Memorandum:  PowerPoint or Word?  I cast my vote squarely on Word, but it’s not for the reasons you think it is.

If you’re anything like me, you find PowerPoint much more agreeable.  And for good reason.  It’s quicker:  “Let’s get the show on the road.”

True confessions:  As much as I like Powerpoint for its Quick-Direct-and-Easi-er attributes, Word is the way to go.  In a perverse sort of way, because it is harder, takes longer, and is trickier.

In the Sale of Your Company, process is everything.  The Sales Memorandum, properly executed, is core to that process.  It forces you to go through your business with a fine toothcomb, and is an excellent means of performing due diligence.  You begin to articulate thoughts, ideas and strategies you had not put together previously.

Source: MSFT

Let me explain.  When one writes a sales memorandum, one describes one’s business, in prose, function-by-function, product-by-product:  The Problem, The Solution, Products, Sales & Marketing, Manufacturing, Employees, Management and Historical and Projected Financials.

When writing a Sales Memorandum, the process starts with a day of due diligence, where each Company officer is interviewed.  The officer is asked to talk, complete with slides and handouts, about their background, their job history, the area they supervise, their people, their issues, their goals.  They also are to provide quantitative detail about their area of the business.  This can be more than a full day.  You then take whatever market research you can get your hands on, industry information and pull it all together in a sales memorandum.

Writing it all down forces one to be exact.  To be efficient, each company officer will write down descriptive information and give it to a central person to consolidate into a the document.  That central person is someone who knows how to write, and is probably the Business Development, CFO or Marketing/Sales person.  With larger, more prosperous companies, that person is the company lawyer.  Why the Company lawyer?   The lawyer has experience in writing these documents, and is keenly aware that the Sales Memorandum is a legal document and treats it as such.

Yes, a legal document.  Platitudes, exaggeration and hyperbole are verboten.   Even more disturbing to the owner/manager, one includes the company’s negatives, limitations and downsides. Not in gruesome detail, but in enough detail to make a manager/owner squirm.  The incentive for doing so is compelling:  However, far worse is a lawsuit from a disgruntled buyer who claimed that you misrepresented the facts about the Company.  Even though, the document states in large, 30 point type that the buyer is responsible for their own due diligence.

Once you’ve written it down, and are pleased with the final document, I guarantee that it will have taken two to three times as long as you think it should take. Writing a Sales Memorandum is a painstaking task.  But it does have huge rewards.

At the end of the day, you have articulated your company’s mission, critical success factors, business model, strategy and business.  In doing so, you have assembled most of the material required for buyer’s due diligence, and the Company Presentation and Executive Summary will write themselves.  In fact, the only discussion in creating the Company Presentation will revolve around the number of words on the page, not content or approach.

By taking this approach, you are in fact guiding the discussion with any potential buyer.  The better prepared you are, the more professional and effective you appear.  And that is what process is all about.  Attracting a bona-fide buyer and closing the deal on favorable terms.

What is your experience with writing a Sales Memorandum?  Have you used PowerPoint.  Which do you prefer?