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Selling A Business - Business Sale Lawyers

The sale of any business is the culmination of years of hard work. It can be a complex and emotional process, which is why you should always seek professional advice from expert business sale solicitors. At Stephensons, our business sale lawyers understand that you will need advice from someone you trust, which is why you will have a point of contact within our team to ensure you get the continuity of service you deserve.

Whether you are looking to sell a small business, a family enterprise, a large company or need advice on selling a start-up, our professional and experienced business sale lawyers can give you the legal advice you need to ensure you maximise your return of the sale of your business. Contact us today on 01616 966 229 and speak to a member of our team.




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How to sell a business?

If you are thinking about selling your business, you will need to prepare your company for a sale by doing your due diligence. Depending on your objective you will need to go through a process of ‘business optimisation' to ensure you will get the best possible price. The main areas you will need to do your due diligence in is:

  • Finances
  • Your IT infrastructure
  • Your business strategy

Buyers will want to see clear and ideally healthy accounts and they will want to know the state of your IT infrastructure in case they need to invest in new equipment or software. Last, but no means least, you will need to review your current business strategy to ensure it is robust and appealing to investors or buyers. Another piece of advice we always give businesses, large or small, is to ensure all of your ‘housekeeping' is up to date. This includes any human resource matters, formalising contracts and dealing with any other paperwork that may impede your business' sale. 

Any potential buyers or investors will also conduct their own due diligence, so ensure you present this information well, and if there are problems, honesty is the best policy if you wish to achieve the best possible price.

Steps to selling a business

Many business advisers liken selling a business to selling a house. You will need to decide if you want to sell in the best condition possible for the top market price or as a ‘doer-upper’. Our expert commercial and corporate solicitors can advise you on what they think is best for your situation. 

What is your objective?

Before you commit to a sale you need to decide whether you would like to remain involved in the business, sell a minority stake, sell a specific element of your business or do you want to retire and exit altogether? Any legal advice you receive will be tailored to your specific circumstances and the exit strategy you wish to take.

Think ahead

You want to get the best price for your business, and this means starting the sale process at least a year prior to completion and commencing the preparation in earnest at least six months beforehand. The value of your company will be affected by the market at the time of the sale. You should, therefore, work closely with your business solicitor to best market and present your business for sale. This includes managing the unrecoverable debts, mitigating any potential claims against the business and ensuring a sound business model/plan is in place.

The business will also need to manage dividends, drawings and expenses well in advance of the sale. It is vital that you work with your accountant to ensure you can demonstrate the profitability of the business. The due diligence searches will uncover the steps you have taken demonstrating that your business has been run effectively and efficiently.

You should also ensure that your key contracts with customers and suppliers are all in order. If you are intending on selling shares in a limited company, then a shareholder’s agreement should be drawn up as a priority to ensure that the shareholders are all in agreement as to what will happen upon a sale.

Develop a realistic growth plan

Most potential investors or buyers will want to see a realistic growth plan or business strategy going forward. You will need to answer questions such as what are the potential expansion opportunities available for a buyer? You will also need to be well versed in the state of your specific industry and the opportunities available for the new owner as well as the evidence to back this up.

Establish an effective and efficient management structure

How is the current management structure set up and will it ensure the business continues to operate effectively and profitably when the current owners and shareholders are no longer part of the team? Any potential buyer will want to be reassured that the transition of the business to new ownership will be seamless. It is important to consider succession planning and leadership.

The juggling process of preparing for a sale and the transaction itself, whilst continuing to run a business, can be a daunting task. Serious consideration should be given to appointing a director or a general manager to run the day-to-day business in the interim.

Remove cost inefficiencies

A buyer will be disincentivised by an acquisition which will require a significant investment post-sale. Equally, by cutting unnecessary costs, the profitability of the business will increase, leading to higher returns in the sale. Therefore, carefully review any major expenses which will affect profitability along with general overheads.

Financial controls

Buyers will want to see the company’s current accounts amongst other financial documentation. This information needs to be presented in a simple format and any discrepancies on the balance sheets need to be explained.

Identify a buyer

Beware of commencing the sales process too soon. You want to avoid being involved in the process of putting things right in the business when you have your potential buyer and their advisors observing and scrutinising your progress.

Discretion is key

The sale of a business can create considerable unrest among your team, customers and suppliers. So, keep it under wraps until there is a committed buyer and a deal on the table. It can be difficult to keep the sale confidential, but brokers and blind advertisements in the marketplace can help to get the word out to potential buyers.

Seek professional advice

Identify your professional advisers early on in the process. You will need the best available advice from a lawyer, accountant, specialist tax adviser and broker or corporate finance adviser to find a buyer and negotiate the sale. The advisors you have chosen can assist in deciding on a realistic valuation, gather financial information, discreetly solicit possible buyers, produce the sales memorandum and confidentiality agreement for interested parties and negotiate a beneficial sales agreement.

If you are thinking about selling your business and need expert legal advice call one of our corporate lawyers on 01616 966 229  today.

What our clients say

We sold our business and we’re reassured, all through the process. Louise Hebborn explained every step and made sure we understood everything. She always had our best interest at heart and strived to get the best outcome for us. This meant more work for her, but that was irrelevant. She worked tirelessly for many months and also continued to support us after completion. Nothing was too much trouble and I always felt I could pick up the phone at any point, if I needed to ask or confirm anything. 

Selling a business FAQs

Selling a business takes a lot of work and preparation. Take a look at our FAQs on selling a business below.

How to start a selling business?

When you are looking to sell your business, you will need to prepare your business for sale. This means ensuring that the accounts are clear and up to date, all paperwork such as contracts, legal claims and HR issues are resolved, recover (if possible) any outstanding debt, prepare a realistic and robust business strategy and ensure your IT infrastructure is in good shape. Once you have prepared your business for sale you can work with a broker or sales agent to start courting buyers.

How to value a business to sell?

A business is usually valued as a multiple of sustainable profits, adjusted to take account of things like finance charge and excessive director salaries, which are usually added back. This multiple can vary widely anything from two to as much as ten times, but the average will be around two to six times. The multiple applied will be determined as a result of various factors. Invariably, a business is valued on adjusted sustainable profits. You should seek to maximise this figure as much as possible while grooming your business for sale.  Your accountant will advise you on the value of your business.

How to sell a small business in the UK?

If you are looking to sell a small business you will still need to do your due diligence. We recommend auditing your business from the viewpoint of a buyer. This means looking at everything that contributes to your business' success from facilities, products and people to marketing and your brand image. Reflect on the findings and take time to improve on anything you see lacking before commencing the sale process.

It might seem trivial, but assess the physical appearance of your premises as first impressions can influence the negotiation process. Also, make sure that your lease has a sufficient term left on it to be saleable to a buyer. This can be particularly important in some sectors where the value is largely in the premises, such as retail, distribution and leisure sectors.

You need to be able to present the potential buyer with hard data on how predicted future growth and expansion will be achieved. You will need to have a clear business plan which is supported with evidence of what has been achieved previously and the prospects of predictable and consistent growth.

How to sell a franchise business?

In the UK, if you are planning to sell a franchise, we recommend that you start planning a year or two ahead of the time you wish to exit the business. During this time it's important that you identify any weaknesses in the business and try to find a suitable and sustainable solution to them.

Selling a franchise is like selling any other business, you need to do your due diligence and ensure your finances look good and all your customers, suppliers and staff have the relevant contract. When it comes to IT, you are probably working with equipment and software that the whole company uses, so this may not be as relevant as it is with other businesses.

However, the main difference between a franchise and other businesses is that the franchisor will most likely have the final say on whether the buyer you have found is suitable. They may even have a list of potential buyers already, so it's important to liaise with your franchisor from the start.

If you are selling your franchise, you will still need advisors such as an accountant and a corporate lawyer. Our franchise solicitors are experts in their field and can help you prepare your franchise for sale – contact Stephensons today on 01616 966 229 .   

How much does it cost to sell a business?

The main cost of selling a business lies with your advisors’ fees. Typically, when selling a business, you will need help from:

  • A corporate finance adviser
  • A corporate lawyer
  • A broker
  • An accountant

A corporate advisor will help you to prepare the business for sale and some may help you identify potential buyers. If your corporate advisor does not have expertise in finding a buyer, you may need a broker. A broker works in your interest so it may be a worthwhile investment.

An accountant will help you sort out your books and finances– a vital part of selling a business. A corporate lawyer will draft and negotiate the sale agreement and our expert commercial solicitors can also help with formalising contractual relationships with your customers, suppliers and employees. We always recommend discussing your plans to one of our business lawyers before you begin the sales process.

You will also be liable for capital gains tax (CGT) when you sell your business. Depending on your circumstances you may be able to pay a lower rate of CGT if entrepreneurs' relief is available to you.

Do I need a solicitor to sell my business?

You do not have to use a solicitor to sell a business, however, it is highly recommended that you use one. Selling a business is a highly complex process and a solicitor will help you prepare the business for sale by:

  • Ensuring all contracts with customers, suppliers and employees are up to date
  • Draw up a non-disclosure agreement (if applicable)
  • Draft any warranties
  • Draft and negotiate the sales agreement

When it comes to contracts, the wording is very important. It will be your solicitor's job to ensure the wording of the contract is correct so that it protects you and your interests.

The fees your solicitor will charge will depend on the services you require. At Stephensons, we typically bill by the hour or we may be able to negotiate a fixed fee if appropriate. All of our fees are competitive and reflect the expertise of our team. To discuss payment options, contact us today.

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