What are the key points to bear in mind when it comes to selling your business? We look at how best to get your house in order for private company sales.
Selling a business could be seen as similar to selling your house. You will of course want to makes sure everything is nice and tidy, and as attractive as possible to potential buyers. You would sort out the argument with your neighbour and get that fence fixed before allowing estate agents to show prospective buyers around your house. The same goes for selling your business, making sure everything is ship shape before going to the market.
Rather than an estate agent, you will talk to a corporate finance accountant, who will look to find you a buyer and work out what a good asking price will be. We can put you in touch with recommended accountants and work together to maximise the value of your business.
Key legal points to consider before selling your business include:
- Customer and supplier contracts
- Ownership of key assets such as premises or intellectual property
- Lease expiry dates
- Employment contracts
- Shareholder records, including shareholders’ agreements
Customer and supplier contracts
Have you checked your key contracts recently? Do you know that they are all signed and up-to-date? It might be that your relationship with your customers is excellent and you have been dealing with each other for many years, so neither of you have even realised that your contracts are out of date. However, if you are selling your business, it is important to get the key customer and supplier contracts signed and dated.
Is your lease about to come up for renewal? If so, make sure that it is renewed and that the business has suitable premises. You do not want to have a lease expiring in six months if you trying to sell your business.
It is important to have all employment contracts sorted out. You would assume that this would be the case for all employees but do not forget that directors are also employees and require an employment contract. As a director, sometimes you might not get around to signing a contract or you could think you are your own boss. Even if you own the company, the company probably employs you, and you need to have an employment contract.
If there are employment contracts, do they have enforceable restrictive covenants?
Your shareholder records will need to be up-to-date before going to the market. Evidence of who the shareholders are should be recorded.
Ensure that your company is all set for sale by following the above advice and we can crack on with doing the important things when it comes to selling your business. If that is all sorted, there should not be any need to bake some bread or put a pot of coffee on in order to make your business more enticing.
Lawyers for the potential buyers will be doing due diligence and you do not want them picking holes in your business. They could devalue your business, delay the sale or cause a buyer to withdraw.
Even if the sale falls through, it will benefit your company if you have done the housekeeping for the next sale opportunity.
If you are thinking about selling your business, get in touch with our corporate lawyers so that we can help get the deal done.
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