So you’re thinking of selling a business? We here at Legal Clarity are here to help you navigate the complicated and emotional process of selling your business. We understand that selling a business is no easy task and can be an emotional goodbye after all the hard work you have poured into it.
When thinking about selling a business you’ll need to carry out a thorough review of your business as you will be involved in a due diligence process with the buyer.. This will be based on what you want to get out of your sale, as this will help you sell it to the right person and get the best possible price. The main things you will want to conduct your review around are:
When selling a business, the buyers will want proof of a healthy business, which will be shown through your finances and the state of your assets. Giving insight into your business strategy will also ensure that the right buyers are interested in your company and understand what they’re purchasing.
No matter how big or small your business is it’s crucial that you keep up to date with all ‘housekeeping’ to ensure a successful and straightforward business sale.
It’s also important to note that as the buyers will also conduct due diligence so it’s crucial that you’re honest throughout the entire process.
Other steps involved in selling a business include:
When considering selling a business you will need to identify why you’re selling a business and the outcomes you want to achieve. For example, you will need to decide whether you want to remain involved in the business, sell a minority stake, sell a specific part of your business or retire and sell the business completely.
Selling a business can take significant planning, with the process starting at least a year before you intend to sell. You should work with an experienced business solicitor to identify the best time to sell and market your business for sale. Part of this involves:
It’s also important to work with your accountant to manage your dividends, drawings and expenses in advance of the sale, as this will prove that your business is in good health and will show when buyers undertake due diligence.
You will also need to get all of your key contracts in order, prior to the sale whether you are selling the business assets or the shares in your company.[1] If you have any other shareholders in your company, you will need to consult with them regarding the proposed sale.
When creating a growth plan you will need to answer questions on what potential expansion opportunities are available to the buyer. You will also need to understand the state of your industry and provide evidence of the opportunities available to them.
You will want to review how your management structure is currently set up and evaluate how it will continue to operate both effectively and profitably, especially if the current owners and shareholders won’t remain involved. This is essential for reassuring the buyer that the purchase is worth the investment and will transition seamlessly.
Reviewing your business inefficiencies will improve the selling price of a business. Buyers will want to pay less or even be put off buying a business that requires significant investment once the sale is completed. You should fix any issues and review major expenses that affect profitability.
Identifying a buyer requires great timing and should be undertaken after you have resolved any issues. You don’t want to be reviewing and fixing things while a buyer is conducting due diligence, as this may reflect poorly on the business.
Working with professionals including business lawyers, accountants, specialist tax advisors and finance advisors will ensure the business sales process runs smoothly.
Explore our selling a business checklist for further guidance.
Capital Gains Tax (CGT) may need to be paid on any profit made on the sale of a business and we suggest that you obtain advice from your tax adviser as to how to best structure the sale before engaging in detailed negotiations with a buyer.
On average selling a business can take between 6 and 12 months, but this can differ depending on the circumstances and complexity of the sale.
At Legal Clarity, we’re here to help you every step of the way. We have extensive experience in selling businesses and know how to navigate complex sales while ensuring the whole process runs smoothly.
Speak to one of our Selling a Business Solicitors today to see how we can help you.
