There are many reasons business owners may wish to sell their business. Retirement planning, fatigue, succession. Whatever the reason for the sale, preparation is key when it comes to selling your Business. It is really beneficial if, ideally even before putting your business on the market, you have invested some time into making sure it is ready to sell, attractive to investors, and that you are ready to let it go. Our Company and Commercial lawyers at Scott Bailey are perfectly placed to make sure you have everything covered before getting your business on the market. Here is our essential pre-sale checklist of things to make your business ready to sell, and help achieve a smooth transaction.
Think about what any potential buyer will want to know.
It is a good idea to do your own health check of your business, that way you can fix any issues that may arise in the Due Diligence process. A potential buyer may try and re-negotiate the sales price or pull out altogether if a business appears in bad shape.
Carry out a review of your commercial contracts.
Any buyer will expect to see copies of all of your commercial contracts. You should carry out a review of these before putting the business on the market to make sure they won’t be impacted by the sale and that should the seller wish to continue with any contracts, they can do so without interruption to the business. It is important to note that all contracts vary, which is why this review carries so much importance. Our commercial solicitors can assist with contract reviews where they may be complex or confusing.
If the business operates from a leasehold premises, it is usually the seller that needs to obtain consent from the Landlord, and they will commonly require references from the perspective buyer. It can be worthwhile checking requirements in advance, so that you can work effectively with the buyer to ensure a smooth and swift transition. Our commercial property lawyers can review your lease and advise on what your landlord may be entitled to ask for.
Make a full check of your Intellectual Property (IP) Rights
The goodwill of a business is often one of the most important factors in a buyers decision to purchase. It is the intangible assets, such as trademarks, copyright and patents that go towards creating the brand recognition which is integral to this. As part of the selling process, you will need to disclose all IP Rights to the buyer, including who owns the IP and where the owner is unclear a buyer may require Assignment Agreements to be entered into. Before finding the right buyer it is a good idea to have carried out an audit of your IP Rights so that you are prepared when it comes to sell. Our commercial solicitors are experienced in advising on intellectual property matters and can help you carry out a review of your intellectual property assts.
Check the law when it comes to employment
Employees in the business will be entitled to certain rights when it comes to a business sale. If the shares are being sold, then the company will continue to be the employer and there should usually be no change. With an asset sale, usually the employees will transfer to the buyer under the TUPE regulations, with any terms and conditions of employment being maintained. You will therefore need to prepare a full list of your employees, and the terms of their employment, for the buyer. Get all of the employment contracts and handbooks together. If you do not have them in place, now is the time! Our business solicitors can help prepare suitable employment contracts and company handbooks. It goes without saying that your employees may be worried about the change of ownership of your business so the transition needs to be handled sensitively.
Get your finances up straight before the sale
The buyer will want to investigate the financial affairs of the company, including examining the accounts, seeing business bank statements and any other assets within the company. Any potential buyer (and maybe their accountant) is going to want to give the tyres a good kick, and make sure they are seeing an accurate reflection of the company’s position. It is a good idea to be prepared for this and have any information you might need at the ready. This is where liaising with your accountant ahead of marketing the business is a good idea as well.
Make sure your corporate filings are up to date
Make sure you have reviewed Companies House to ensure any filings are up to date as well as reviewing your Statutory Books are current.
How we can help?
Our Hampshire corporate lawyers can help guide you prepare your company for sale, including reviewing contracts, auditing your IP property rights, providing advice on employment matters and making sure your corporate filings and statutory registers are up to date and accurate. From our base in the New Forest we have successfully guided many businesses through the sales process, from local sole trader businesses between Southampton and Bournemouth, to larger national corporations based throughout the UK and trading further afield.
If you are considering selling your business and would like advice on the best way to proceed or how to prepare, get in touch with our Company and Commercial Team today. Our fixed fee legal costs for our pre-sale health checks will certainly help.
If you already have a buyer lined up, we can help finalise the terms of the deal (in formal heads of terms), and then negotiate and draft the required documentation to safely transfer your business and property interests to the buyer, limiting your exposure for subsequent claims.