There are many reasons why you may want to sell your business, from retirement to moving on to another venture. But the decision to sell a business is not to be taken lightly and it is not usually a quick process. In fact, it is sensible to begin planning the sale of your business a few years in advance.
Jamie Gill, solicitor in the corporate and commercial team at Ansons Solicitors, explains how to effectively plan the sale of your business.
The three core aspects to selling your business are:
Prepare your business
It is important to speak to your accountant and plan your tax strategy early on as you may need to re-structure before you sell your business. Depending on your personal tax circumstances, you will need to consider whether you want to sell the shares of your company, meaning selling the company itself lock, stock and barrel, or whether you sell the assets of your business. This means selling certain parts such as the goodwill, key contracts and assets.
It is important to have all of your paperwork in order, such as ensuring contracts are signed, dated, with full terms and conditions, or ensuring that all of your insurances are in place, up-to-date and, importantly, in the right business name. Overall, the better organised your business is, the less opportunity there will be for a buyer to knock you down on price.
Premises are key to any business. Some well spent money on improving your premises, if they need it, could repay you several times over when you are looking for serious buyers. You should also ensure you have all the correct planning permissions and consents for your property as well.
Market your business
It is sometimes difficult to know what to expect in terms of value and so it is important to speak to your accountant and specialist brokers to help value, market and sell your business. Experienced brokers will have significant exposure across the market maximising the potential for a buyer and will be able to guide you with good local and sector knowledge. An agent with the cheapest fee or the highest valuation is not always the route to success. Your accountant or solicitor should have some useful contacts to help guide you.
Sell your business
Getting experienced commercial advisors is vital, whether this is financial or legal, as this will ensure a smoother transaction. Selling your business is not the same as selling your house and so it is important to get advisors who are commercially experienced.
While some people could be put off by the cost of using specialist advisors, this is significantly set off by the time and stress saved by having someone who knows what they are doing – and may actually save you money in the long run!
A prudent buyer will carry out a due diligence exercise, which is an investigation into all aspects of the business. This is usually broken down into legal, done by the lawyers, and financial, done by the accountants. It can be time consuming but an open and honest approach is always the best policy. This is where having all your documents and records in order pays dividends.
Once the due diligence is underway the next part of the process is to negotiate the sale agreement, which is usually prepared by the buyer’s solicitor. This is the key document between the parties and is often subject to extensive negotiation. This is when an experienced commercial lawyer will come into his own. Their primary concern is to firstly obtain payment for the business and secondly to limit the seller’s liability and restrictions as much as possible.
The lead up to completion can be time consuming, stressful and emotional. Assuming everything has gone smoothly, you will sign your agreement, receive your money, hand over your keys and head home for a glass of well-earned champagne!
Once the excitement has died down you should consider reviewing your will to keep the tax man as far away from your lump sum as possible.
For further advice about selling your business, contact Jamie Gill in the corporate and commercial team at Ansons Solicitors on 01543 431 185 or email firstname.lastname@example.org.
Ansons Solicitors has offices in Lichfield and Cannock, Staffordshire.