Selling a business is no easy task. That’s why it’s important that you’re properly prepared well in advance. You’ll need to focus on why you want to sell the business, finding legal assistance, reviewing your financials and much more. To make it easier for you to identify the tasks you need to complete to be ready to sell your company, we’ve created a selling a business checklist:
Know your reason for selling the business
While it seems obvious, you need to understand why you’re choosing to sell your company. Many people sell due to retirement but we’re also seeing an increase in sales from younger business owners who are looking to make a profit and start a new business venture. Understanding why you’re selling will help you navigate the goals and outcomes you want to achieve from it.
During this process, you’ll want to understand the financial outcome of the sale to see if it’ll help you meet your goals.
Create a contingency plan
Sometimes your original plan may fall through. It’s always a good idea to have a contingency plan. Your legal advisors can help you formulate a new plan that suits you and your company’s needs.
Look for legal assistance
Legal assistance is an excellent way to ensure you’re fully prepared to sell your business, as they’ll provide guidance on how to arrange the sale. They can help with appointing the right team of advisers in order to find a buyer, get the best deal and organise your finances.
At Legal Clarity our Corporate team will help you negotiate and draft your documents, ensuring your sale is cost-effective and timely.
Identify the areas of the business that need improving
When getting ready to sell your business you should identify areas that need improving. This could include:
- Carrying out compliance and regulatory checks.
- Ensuring your commercial contracts are signed and up to date.
- Updating your employment contracts.
- Checking ownership of all your IPR.
- Keeping your accounts and financial information updated.
Identify any risks
When identifying any risks within your company, you should look at them in the same way a potential buyer would see them. This will help you undertake a thorough review that allows you to solve any issues and get the best sales value. You’ll need to look into:
- Customer and supplier relationships.
- Key employees.
- Ownership of any IPR.
- Any technological disruption.
- Variations to the competitive landscape.
- Changes to regulatory or legal frameworks.
It’s also important to review your legal documents, such as employment contracts, lease agreements and customer contracts.
All of the above can affect the value of your business. However, when you understand any potential risks and address them at an early stage it shows that your company is well-run, encouraging buyers to purchase your business at a good price.
Get your finances in order
Once a NDA or confidentiality agreement has been signed, you should gather at least three years worth of financial information to share with your potential buyers. This will give them a good idea of how well your business is performing, encouraging them to follow through with the deal. You should collect data on:
- Profits and losses.
- Cash flow.
- Budgets.
You can also prepare for their questions and due diligence enquiries in advance showing that you’re taking the sale seriously and care about the future of your company.
Seek potential buyers
Looking for a buyer can begin early on in the sales process. You should think about the type of person you want to acquire your business, their motivations and values. You may already have someone in mind. If that’s the case, it’s a good idea to put together an anonymous sales memorandum to send over to your desired buyers. Your memorandum should include information on what you do, your USPs and why you’re selling your business.
If you’re considering selling your business, our Corporate team is here to help. We pride ourselves on working with you to curate the best deals and agreements. But if your original route doesn’t go to plan or may not be the best fit for your business, we’ll help you find alternative options. Get in touch to see how we can help.
