Top Tips when Selling a Business
When contemplating purchasing a business, you have some major issues to sort through.
The following list is only some of them.
- Take tax and legal advice before selling
- Decide if you want to sell the Share holding (Share Sale) or if you want to sell just the Assets, Name and Goodwill.
- Interview and obtain quotations from Solicitors to handle the legal work.
- Make sure all of your accounting systems, management accounts, statutory accounts etc are up to date.
- Make sure that all of your staff Contracts of Employments have been issued.
- Apoint a Business Broker (such as Biz Sales) to help find a buyer and maintain confidentiality.
- Decide which assets are or are not included in the sale.
- Work to agreed timescales and aim for a Completion Date.
- Ensure all information provided for a potential purchaser is accurate - you can be assured that everything will be thoroughly scrutinised!
- Make sure that any outstanding tax issues, disputes etc are fully resolved.
- Ensure all contracts are in correct legal form for employees, customers and suppliers.
- Make sure that any intangible assets such as copyrights, patents, trademarks are correctly protected.
- Consider reigning back on capital investment to maximise profits, preferably 3 years before selling.
- Don't let the business decline whilst searching for a buyer or during the period leading up to legal completion.
- Don't give exclusivity until an offer has been accepted.
- Type of Deal. What kind of deal will it be - purchasing the assets of the business or purchasing the stock?
- Confidentiality. If the vendor will be sharing confidential information, such as financial statements and customer lists, the buyer probably will be asked to sign a Confidentiality Agreement.
- Letters of Intent. Consider whether signing a letter of intent makes sense before you invest a great deal of time and money.
- Due Diligence. Make sure you have thoroughly checked out the business you are buying—its financial performance, assets, liabilities, contracts, employees and more. Click here to view a sample due diligence checklist.
- Definitive Agreement. You will need a comprehensive definitive agreement setting forth the terms of the acquisition.
