- Advertisement -POP Fit | Fitness classes at the Stroud Hotel | Stroud Times

7 key steps for preparing your business for sale

MOST READ

Selling your business can be a daunting process.  By preparing early, it can help to maximise your return and make the eventual sale process much smoother. 

Tegen Quinn from Redkite Law discusses the key areas to focus on when gearing your business up for sale.

  1. What are you selling – shares or certain assets only?

Selling shares means that all assets and liabilities of the company will be sold whereas in an asset sale, the parties agree which specific assets will be sold, for example, equipment, property, goodwill, intellectual property, etc.

It is important to be clear on the most suitable structure for you and both legal and tax advice should be sought on the implications of each at an early stage so that you can identify the most commercial and tax efficient option for you.

  1. Review your business, its assets and its contracts

Not only will ensuring compliance with all your legal and financial reporting and record keeping requirements give a potential buyer the right impression of your business, but a buyer will also expect to see certain business information from you before it commits to the sale.  

Gathering this information at an early stage will not only help the sale run more smoothly, but it will also allow you to identify and remedy any potential obstacles.

For example:

  • Who owns the assets used in the business? – are they all owned by the business and capable of being sold to a third party?  Check to see if asset ownership is split between different businesses or individuals, or perhaps subject to leasing agreements as this could affect the sale price. 
  • Terms of Business – what written agreements are in place with your customers and suppliers?  If you have your own terms of business are these up to date and being used correctly?   Incorrectly drafted or applied terms of business could mean that you are inadvertently bound by the terms of business of a customer or supplier. Taking early steps to rectify any identified issues and ensure your own terms of business have been reviewed and are up to date will give a buyer added comfort.
  • Protect your intellectual property – this can often be a very valuable and often overlooked asset.  Every business has intellectual property, such as its trading name and logo.  Protecting this intellectual property can help to maximise your business value.
  • Website – Is your website adequately protected, for example, does it display properly drafted and up to date privacy policies, terms of use and terms of business?  Without such documents your business may be vulnerable to claims from website users.
  • Is any regulatory approval required before the sale can complete?  This may have implications on timings. Finding out the timeframes at an early stage will help to manage the sale process.
  1. Employee Review 

Ensure all employment contracts, policies, staff handbook and other employee records are accurate and up to date.

Consider if your business is adequately protected in relation to key employees.  For example, do your contracts contain provisions to protect your confidential information or restrictions on your key employees from setting up a competing business?

Correctly drafted and up to date documents will give a buyer added comfort that all relevant documents are in order.

  1. Property issues – from where does the business operate?

Consider the ownership status of the property from where the business operates; does the business own the property and will this be sold to the buyer, or, is the property leased?  If the property is leased, check that there is a written lease in place with the landlord which clearly sets out the terms of occupation as this will be key for any potential buyer.  Equally as important is ensuring that the lease can be easily transferred to a future buyer.

  1. What are your future plans?

Equally as important as preparing for the sale, are your plans following the sale. Will you remain in the business, or do you plan to retire from it? The answer to this may depend upon the extent to which the business can operate without you.

If you remain an integral part of the business on sale, the buyer may insist that you remain in the business for a period following the sale, to assist with a handover.  If this is not something you wish to do, looking at an early stage to hand over running of the business to key managers will be important.

  1. Are the shareholders in agreement?

If you operate as a limited company and there is more than one shareholder, ensuring you are all in agreement on the sale is key to minimise disruption to the sale process.  If any one of the shareholders becomes disgruntled, it could refuse to sell.  Having a shareholders’ agreement in place which sets out how you will deal with the sale process will minimise any such disruptions.   

  1. Find the right team 

You will need to appoint a solicitor and an accountant to assist you. Sale of a business is a highly specialised process and it is important to make sure you have the right team of experts around you who understand it and can guide you through it.  

Selling your business can be a daunting process.  By preparing early, it can help to maximise your return and make the eventual sale process much smoother.  

Tegen Quinn from Redkite Law discusses the key areas to focus on when gearing your business up for sale.

  1. What are you selling – shares or certain assets only?

Selling shares means that all assets and liabilities of the company will be sold whereas in an asset sale, the parties agree which specific assets will be sold, for example, equipment, property, goodwill, intellectual property, etc.

It is important to be clear on the most suitable structure for you and both legal and tax advice should be sought on the implications of each at an early stage so that you can identify the most commercial and tax efficient option for you.

  1. Review your business, its assets and its contracts

Not only will ensuring compliance with all your legal and financial reporting and record keeping requirements give a potential buyer the right impression of your business, but a buyer will also expect to see certain business information from you before it commits to the sale.  

Gathering this information at an early stage will not only help the sale run more smoothly, but it will also allow you to identify and remedy any potential obstacles.

For example:

  • Who owns the assets used in the business? – are they all owned by the business and capable of being sold to a third party?  Check to see if asset ownership is split between different businesses or individuals, or perhaps subject to leasing agreements as this could affect the sale price. 
  • Terms of Business – what written agreements are in place with your customers and suppliers?  If you have your own terms of business are these up to date and being used correctly?   Incorrectly drafted or applied terms of business could mean that you are inadvertently bound by the terms of business of a customer or supplier. Taking early steps to rectify any identified issues and ensure your own terms of business have been reviewed and are up to date will give a buyer added comfort.
  • Protect your intellectual property – this can often be a very valuable and often overlooked asset.  Every business has intellectual property, such as its trading name and logo.  Protecting this intellectual property can help to maximise your business value.
  • Website – Is your website adequately protected, for example, does it display properly drafted and up to date privacy policies, terms of use and terms of business?  Without such documents your business may be vulnerable to claims from website users.
  • Is any regulatory approval required before the sale can complete?  This may have implications on timings. Finding out the timeframes at an early stage will help to manage the sale process.
  1. Employee Review 

Ensure all employment contracts, policies, staff handbook and other employee records are accurate and up to date.

Consider if your business is adequately protected in relation to key employees.  For example, do your contracts contain provisions to protect your confidential information or restrictions on your key employees from setting up a competing business?

Correctly drafted and up to date documents will give a buyer added comfort that all relevant documents are in order.

  1. Property issues – from where does the business operate?

Consider the ownership status of the property from where the business operates; does the business own the property and will this be sold to the buyer, or, is the property leased?  If the property is leased, check that there is a written lease in place with the landlord which clearly sets out the terms of occupation as this will be key for any potential buyer.  Equally as important is ensuring that the lease can be easily transferred to a future buyer.

  1. What are your future plans?

Equally as important as preparing for the sale, are your plans following the sale. Will you remain in the business, or do you plan to retire from it? The answer to this may depend upon the extent to which the business can operate without you.

If you remain an integral part of the business on sale, the buyer may insist that you remain in the business for a period following the sale, to assist with a handover.  If this is not something you wish to do, looking at an early stage to hand over running of the business to key managers will be important.

  1. Are the shareholders in agreement?

If you operate as a limited company and there is more than one shareholder, ensuring you are all in agreement on the sale is key to minimise disruption to the sale process.  If any one of the shareholders becomes disgruntled, it could refuse to sell.  Having a shareholders’ agreement in place which sets out how you will deal with the sale process will minimise any such disruptions.   

  1. Find the right team 

You will need to appoint a solicitor and an accountant to assist you. Sale of a business is a highly specialised process and it is important to make sure you have the right team of experts around you who understand it and can guide you through it.  

Taking advice at an early stage is invaluable.  If you would like to discuss your business needs with us then please call: 01453 763433.

RedKite Banner CH | 7 key steps for preparing your business for sale

Latest News

Mean on Monday: We must not underestimate the value of our farmers

Here in Gloucestershire, many farmers are really on the brink after the wettest year for 150 years which has devastated their business.
Skip to content