Checklist for Gathering an Information Packet

Are you considering selling your business? Do you have a potential buyer in mind? The next step is sharing information. An essential tool for this is the information package, also known as an Information Memorandum (IM). This is an overview of all financial and non-financial aspects of your company.

Why is an information package important?

Before putting your business up for sale, it's essential to have insight into all publicly available information about your business. Business information providers like Graydon offer comprehensive reports containing both official data (such as annual accounts and publications in the State Gazette) and big data analyses. These reports are often translated into scores like credit limits, payment scores, and ratings.

A negative score on certain features can make a sale difficult. Based on past experiences, 13 risk characteristics that indicate an increased risk of bankruptcy have been identified. Make sure you have a strong case if your company scores negatively on one or more of these points.

Additionally, it's important to correct any outdated or incorrect information in these reports. This helps give potential buyers an accurate picture of your business.

Tip: Download a sample business report via Graydon.

Checklist for an Information Package

Compiling an Information Package is a crucial step in a business transfer. This document provides an overview of the core data of your business and helps the buyer make an informed decision.

Basic data of your business

For sole proprietorships:

• Inventory assets belonging to the business (e.g., equipment, stock)
• Land and buildings (copy of property deeds)
• Machines and equipment (depreciation tables)
• Supplier list
• Customer list
• Inventory list
• Staff list
• List of 'work in progress'
• Specify what remains private.
• Describe trade name, logo, operating address, activities, website, domain name, and commercial lease.

For companies:

• Shareholder register and statutes.
• Annual accounts and any interim figures.
• Lists of staff, customers, and suppliers (anonymized).

General:

• Property deeds of land and buildings (including mortgage status).
• Contracts (lease, credit, insurance).
• Permits and ongoing agreements (e.g., maintenance).
• Legal and financial considerations

Compliance with regulations is essential during a business transfer. Important points include:

• Labor legislation: Check contracts and social obligations.
• Taxes: Ensure no outstanding tax debts or fines.
• Privacy: Comply with GDPR guidelines.
• Permits: Check transferability and validity.
• Intellectual property: Protect brands and patents.
• For specific sectors, such as hospitality or healthcare, there are often additional requirements you must meet.

Specific features of your business

• Are the business premises rented under an existing commercial lease agreement?: copy of commercial lease agreement (note the duration and any conditions upon transfer)

- Possibly new commercial lease agreement (e.g., if you own the business premises yourself and are not transferring them)

• Specific permits: operating permit, environmental permit, building permit (pay attention to the validity period and check whether the permits can be transferred. In principle, no problem when transferring shares, unless permits were granted personally).
• Copy of all ongoing contracts (maintenance contracts, insurance policies, also any exclusivity contracts, etc.): with the transfer of shares, these generally continue automatically except for agreements entered into personally. Ideally, this is explicitly stated when transferring the business.
• Copy of all ongoing credit contracts: same principle: with a share transfer, credits usually continue. Ideally, inform the lender. Extra point of attention: Check beforehand whether personal guarantees or securities have been provided on private assets.

TIP Also read the article on the difference between debts and receivables when transferring a business versus transferring shares for information

When transferring a sole proprietorship or selling the business by a company, debts and bank credits generally do not transfer. The sale proceeds can be used for this.

Privileged debts such as mortgages will in any case be repaid with the sale proceeds of the mortgaged real estate. The notary responsible for the deed will oversee this.

Bankers with a privilege "Business Pledge" will only agree to the transfer of the business once their outstanding credits are repaid.
Tip: It is wise to request the modalities for early repayment for a mortgage release and/or registration "Business Pledge" in advance.

Valuation of the Business

Determining the right acquisition price is crucial. Three commonly used valuation methods are:

• Substantial value: The net value of assets minus debts.
• Economic value: A multiple of the (expected) profit or cash flow.
• Market value: Comparable transactions in the same sector.
• Financeability: The asking price must be realistic and financeable within 5-7 years. Analyze whether the cash flow is sufficient to repay loans and cover future investments.

Tip: Use the UNIZO valuation tool.

Five required certificates

In Flanders, five certificates are required for a business transfer that confirm there are no outstanding tax or social debts. These certificates increase transparency and make the transaction legally sound.

1. No tax debts certificate (to be requested from the tax collector - Article 442bis WIB92; (federal tax) - sample application form
2. No VAT debts certificate (from the VAT collector - Article 93undecies WBTW)- sample application form
3. No RSZ debts certificate regarding employed staff (from the RSZ - Article 41quinquies RSZ Act of June 27, 1969) sample application form
4. Certificate of no outstanding social contributions as a self-employed person (from your social insurance fund - Article 16ter KB no. 38 of June 27, 1967, socio-statute of the self-employed) sample application form Liantis
5. Certificate of no outstanding tax debts with the Flemish Tax Administration. Article 3.12.1.0.14 Flemish Codex Fiscality (Flemish Region tax) sample application form

Conclusion: Good preparation is the key to a successful business transfer. By gaining insight into public data, compiling a clear Information Package, and paying attention to legal and financial aspects, you increase the attractiveness of your company and enhance the chance of a successful sale.