The company information document
After advertising the business for sale, the seller would (likely) receive several enquiries from potential buyers. Since it would not be practical for the seller to outline the principal aspects of the business each time, the seller or his advisor would draft an exposé that summarises all relevant aspects of the business that the buyer should consider. Therefore, the exposé acts as a written summary of the business and enables the potential buyer to decide whether to progress discussions with the seller, with only serious buyers filtered through.
The exposé should be balanced, and include positives and (especially) negatives – ultimately, negatives are likely to surface later during the diligence and potentially collapse discussions given the erosion of trust in the seller. Further, when the exposé reveals any weakness, it provides the seller the chance to present this in the best way and include any potential mitigants.
Typically, the exposé would include:
A notable amount of diligence will need to rely on the seller’s representations (e.g., any threatened or potential customer disputes), which would then be covered by a warranty in the purchase contract i.e., should a customer file a court dispute in relation to a known complaint prior to the acquisition and this was never disclosed to the buyer, then the buyer would be able to take legal action against the seller.
