Preparing a business for Sale
Dawson Radford Solicitors brings you 5 expert tips on a business law topic. Nothing too technical, but a chance for you to gain expert knowledge in a subject that interests you.
This week it’s 5 expert tips on “Preparing for sale”
Decide on a structure – that will suit a buyer
If you’re a limited company are you going to sell the shares, or will the company sell its assets? Does property sit outside the company, maybe in a pension fund or owned personally? Start to think about the tax implications of the sale, both from your point of view and from that of a buyer. Is there anything you can do now to make the deal more saleable?
Is your staff up to scratch?
This will be a key area for a buyer, and a large section of the due diligence will focus on staff. Does everyone have an up to date written contract of employment? Are your staff ratios correct? How about policies and procedures, disciplinary history? A buyer will be looking at the financial cost of the staff but will also want to see signs of an organized, happy team of people who can take the business forward.
Consider ending unusual or onerous arrangements
Does your brother-in-law keep his classic car collection in your outbuildings? Do you deal with certain companies because of a family/friend’s connection, or do you simply lease items which cost too much? A buyer may be wary of any reliance placed upon contracts arranged through family, in case the deal changes after completion. They also don’t want the hassle of having to try to end peculiar arrangements put in place by a seller. Consider whether you have any such arrangements, and whether you can end these before sale.
Wipe the slate clean
If you need to be registered with an authority as part of your business, do you have anything outstanding that you need to deal with? Are all your registrations up to date, and are you compliant? Don’t give a buyer the opportunity to question something that is fundamental to the business. The same goes with HMRC, don’t let payment arrears or investigations stop the buyer from seeing the good business you operate.
It’s business as usual until the deal is done
Some sellers start costing towards a sale – don’t. Groom your business, and make improvements, but don’t take your eye off the ball. Running things down will not only leave a buyer unimpressed, but if the deal doesn’t happen you are then left with a business that has probably reduced in value and will take hard work to get back to where it was. Until the contract is completed, carry on as if its business as usual.
In addition to all of this, you need an expert solicitor to guide you through the process, and help you achieve the best possible deal for you. If you’d like to chat about a prospective sale, or indeed a purchase, then please visit our contact page and speak with Jo Dawson.