Getting your business ready for sale is a daunting prospect. Unless you have sold one before, you may not know what to expect. Luckily, there are steps you can take to ensure that you set off on the right foot for a streamlined sale process, with minimal stress and delay.
Getting documents in order is an inevitable task for business owners. At no time is this more important than in the run up to sale.
Check that all contracts and legal documents with customers, suppliers, employers or other third parties are in place. Review their terms (at least an outline) prior to any sale, paying particular attention to clauses relating to notice, assignment, change of control and exclusivity, which may cause delay if not identified early on.
Companies, even those run by an individual, are distinct legal persons subject to many filing requirements. Filing at Companies House should be up to date and accurate. Any errors should be identified and corrected as soon as possible. Likewise, your Statutory Registers should be accurate and up to date, having all previous stock transfer forms and all stamp duty stamped by HMRC, where appropriate. This is crucial in a sale by shares.
Know what it’s worth
Knowing the value of your business will assist in negotiations. Precedent transactions (sales of similar businesses) can take you some way to a ball-park value, but each business is unique and engaging a professional is advisable.
You can never have a second try at a first impression. Buyers want to know that they can trust you. Clean and tidy premises help build this relationship by showing that you have pride and care in your business.
In the run up to sale, minimise disruption by retaining active involvement in the company. This is crucial where the sale agreement links purchase price to future performance or where you retain some involvement in the business (for example, as a consultant) post sale.
Know your goals
Selling a business is not always about maximum capitalisation of years of hard work. Some sell quickly to relocate or sell an underperforming part of the business to focus on other opportunities. Identifying and communicating your objectives will guide the sale process and influence the method of sale used. For example, it may be best to sell as a collection of assets if you intend to retain parts of the business, or sell the shares of the Company owning the business if you want a clean break.
Get ahead of the game
It is sensible to engage with your professional advisers at an early stage, ideally a year to two ahead of any sale/exit. At TWM, we have particular expertise in this area and can:
- review your legal documents
- relieve the stress of the process, so you can keep focused on doing what you do best and keep running your business smoothly; and
- help to save you time and money by having your business ready to be sold in advance of any sale.