Whether you want to wind down, or are looking to make a fresh start, 2018 may be the year for you to sell your business.
If you’re thinking about selling your business or you are already in talks to do so, it is beneficial for both you and the buyer if you have your books in order. You can make the process much easier and more organised if you’re sufficiently prepared.
During the sale process the buyer will expect to see information about the company, this process is known as due diligence. Depending upon the size and complexity of the business this process can take some time to complete. To speed it up and prevent the buyer becoming unnecessarily concerned about parts of the business it can be useful to ensure the legal aspects (contracts, company books and so on) are all in order. As well as making good practical sense this can also reduce the overall legal costs of the transaction and for smaller transactions may remove the need for your legal advisor to be involved in the early stages of due diligence altogether.
The checklist below includes some of the things you need to think about before selling your business.
Do you have the authority to sell?
- Do all the shareholders agree to the sale?
- Can the company board authorise the sale?
- Do you require the consent of any shareholders or banks to sell?
- Is there a shareholders agreement in place?
Have you considered confidentiality?
- Who knows that you are considering selling your business?
- Do you need any confidentiality agreements in place to protect key contracts that may require it or to protect trade secrets?
What is your corporate governance structure?
- Are your company books in order?
- Are you up to date with filings and tax returns?
Are your accounts in order?
- Do you need any consents concerning a financial agreement?
- Do you have an accountant in place to assist you with the sale?
What are your company assets?
- Can you provide a schedule of all the company assets?
- Does the company own all its assets?
- Are there licences in place for any assets, and are these licences valid?
What contracts is your company currently a party to?
- Will any of these contracts continue following the sale?
- Do you have copies of any maintenance, hire purchase, lease or commercial agreements?
- Are the contracts signed/recorded in writing?
What are your company property arrangements?
- Do you have a lease in place for the company premises?
- Can you provide details of the company business rates?
- Can you provide the details of any insurance policies?
Have you considered Intellectual property rights? (patents, trademarks, copyrights, designs)
- Does your company own all of its intellectual property?
- Are all the rights in intellectual property registered?
- Do any contracts with the company employees refer to intellectual property?
What about your company employees?
- Are the company employees to be retained following the sale?
- Who are the key employees who any buyer would expect to see retained?
- Do all the company employees have employment contracts?
- Do the employees need to be informed of the potential sale of the business?
- Have you considered the tying in of retention bonuses?
- Do you have details of the company pensions schemes / policies? Are there any deficits in the pensions schemes?
- Do you have a schedule of the employee salaries?
How will the business be sold?
- Will you sell the business by a share sale or an asset sale?
- Have you had advice from a tax specialist on selling the business?
Are you in talks with or have you identified any potential buyers?
This may seem like a lot of points to consider, but if you can answer the majority or all of the above, this will put you in a very favourable position when you come to the sale of your business. It will also make you more attractive to potential buyers who can have confidence in your transparency and knowing the details of the business they are buying.
The sale process can be difficult, but it can be made a lot easier if you have advice from a solicitor with expertise in the sale of businesses.
If you are in need of advice or assistance with the sale, our corporate solicitors will be able to provide you with a personalised quote for its services. Please call 01616 966 229 or complete our enquiry form if you would like to know more.