I've written numerous IMs for UK companies and have put together some detailed advice on what to say and not say in IMs. Have a look here: http://ukbusinessbrokers.com/how-to-impress-investors-to-finance-or-buy-your-business/

Yes, reaching out to other companies to test the water is vital. But that's something you do BEFORE you sign LoI and get into DD. In fact, you are probably under exclusivity anyway (and are legally bound to not discuss the sale with any other prospective buyers). When the sale is being handled by a professional advisory firm they would ensure that competing bids are attracted at the start of the process, not past DD with one party. Apart from the ethics, there are many ways you could end up losing your existing deal if you start entertaining or soliciting other offers at this late stage.

It's not necessary to have a recurring revenue stream to get a good price for the business, but it helps. If you want to sell in 3-4 years, my top tips are: 1. Ensure you show regular growth over this period as buyers are going to project that performance into the future and value your business based on that. Hit a plateau and buyers will project flat earnings going forward, they won't believe any projections involving a sudden jump in growth post-sale! 2. If you show little profit in your accounts you pay less tax but that will damage your sale price. An additional $100K in profit on the books could result in half a million more at the time of sale (assuming a multiple of 5) but will cost you a fraction of that in tax. 3. Get size. For buyers there's security in size. Security = lower perceived risk. Lower risk = higher price. 4. Have a good management team in place and make sure the business is not dependent on you ...or on any one or two key people as that severely damages price. (You could research "key person discount"). 5. Have a good accounting package and demonstrate not only that you're on top of your accounts but also that you understand and have easy access to key "management accounts" information and intelligence. 6. Keep good records - from employee contracts to online services you're signed up for. Keep copies of contracts, emails, website traffic logs, everything. 7. Create manuals to document your procedures, processes etc. And keep updating them. Buyers really like to see good documentation of business knowledge and operations. 8. Run the business separate to your personal finances. For example, avoid signing personal guarantees on business debts where possible. 9. Hire a good adviser to assist with the sale ... and hire them early. It's never too early. 10 It's worth investing the time to find the right expert / firm as there are many charlatans about. Once you've found the right person/people, pay them well and keep them close. Good advisers can add enormous value i.e. many, many multiples of the fees you pay them.

These are questions best addressed by the corporate advisory service handling the sale of the business. It is not necessarily a lengthy process to secure a PE deal. Some PE firms are well placed to take a quick decision provided, and this is an important caveat, provided you are well prepared and have all your ducks in a row. And you have the advantage of a full management team and one (presumably) already motivated by a share incentive scheme. It's imperative you have a good corporate finance adviser on board. It may well be that your best option is for the management team to raise finance independently and without relying on PE. I must confess that the latter part of your post has lost me completely and I've no idea what you're trying to get clarified!

If you've had a good month I can see the temptation to take those figures and multiple by 12. However, it's not as simple as that, unfortunately. Your run rate is a financial prediction based on your current performance. So, it would be reasonable to plot your performance over the last year (or two) and use that to extrapolate likely future trajectory. It is always exclusive of VAT.