In this guide, commercial solicitor, Katherine Waumsley, discusses the stages and considerations involved in selling a business.
When it comes to selling a business, it is often difficult to know where to start. Sometimes this is a thought-out process that has been planned well in advance, other times the sale of the business is forced by other circumstances and unexpected. Either way, there are certain processes that you will likely need to follow.
The below sets out a guide to assist whatever stage of the process you are at.
Sometimes steps 1 and 2 happen at once with an offer being received and accepted by a business. This is perfectly acceptable and often means that the Buyer has carried out their own investigations before approaching you.
Preparing your business for sale is key for those who are planning to sell their business. No matter what kind of business you operate, there are certain matters that you will need to tend to in order to ensure that they are in a position that is as attractive as possible to a buyer.
This may include reviewing and assessing the business accounts by involving your accountant, as well as procedures of the business and the legal structure and ownership of the business. All such matters may have an impact, not only on the negotiations, but also on the legal process.
Call our commercial team on 01206 593933 to discuss the initial stages of selling a business.
Once your business is ready to be sold, you will need to locate a buyer if you have not got one lined up already. This is where the terms of the sale will be negotiated.
Such terms will include matters such as the price, any handover period or other special provisions to be included in the legal process.
This step will also include how the transaction will be structured. This will be by way of either an Asset Sale or a Share Sale. Please feel free to contact Holmes & Hills at this stage and we can go through the options available with you.
If your business is operated by way of a limited company, then either an Asset Sale or a Share Sale will be possible, however, if you operate your business by any others means, including a sole trader or partnership, then only an Asset Sale will be possible.
It is recommended that an accountant is involved at this stage as the structure of a transaction is often governed by tax implications.
Once you have negotiated the terms of the sale, you will then need to commence the Legal process of actually selling your business.
This is where the commercial team at Holmes & Hills will be able to assist.
Prior to commencing the legal process, there are a few potential documents that you may require a prospective Buyer to enter into. These may include:-
This is the stage in which the Buyer and/or their representatives will ask questions about the business. The subject matter of such enquiries can vary however it is often detailed and a time-consuming element of the transaction.
The Due Diligence is an opportunity for you as the Seller to disclose information about the Business that may be of concern in order to carve out such matters from any future liability.
An Agreement will need to be prepared setting out the terms of the sale, as well as ancillary documents required to give effect to the sale of the business, which may include property documentation.
These documents will most likely include warranties, which are effectively guarantees provided by you to the Buyer of the truthfulness of the information which has provided in the Due Diligence process. Such information that is disclosed must therefore be as full and complete as possible in order for it to be noted in the legal documentation and prevent any repercussions following completion of the sale.
After the sale of the business has been completed, there will often be filings at either Companies House or HM Land Registry that need to be deal with. Your solicitor will confirm what needs to be actioned.
At Holmes & Hills we have a team of specialist commercial solicitors who will be able to assist with the sale of your business, to make the transaction as efficient and stress-free for you as possible.
If you are thinking of selling your business, please call our commercial team on 01206 593933.
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