Refreshingly clear advice
Kaye Whitby explains how to make your business fit for sale
It can be a hard decision to sell a business. We often see the emotional attachment that owners and family members have to their business and the soul destroying impact when the buyers’ advisors embark on the due diligence process. This scrutiny can result in f laws that owners didn’t know existed being revealed, hence achieving the objective of protecting the buyer and negotiating the price down. To lessen this pain and receive the best sale price for your business, there are a number of ways you can prepare.
Before marketing your business you should work towards: 1. Getting it in the best possible shape 2. Eliminating as many potential “issues” as possible
It is highly advisable to involve your business advisor or accountant to look at whether or not you have the appropriate financial controls in place and to ensure that your business is maximising profitability.
• Do you have a set of up-to- date financial information and robust cash f low statements?
• Can you demonstrate that you are able to attract new and retain long term business?
• Can you initiate cost efficiency measures or eliminate unnecessary expenses?
Many business owners don’t even consider their legal documentation, which can lead to major problems and greatly devalue your business. It is important that you:
• Resolve any actual or potential legal disputes, such as late and bad debt
• Demonstrate good corporate governance, which is seen as a good indication that those running the business have strong and efficient risk management in mind
• Can legally prove that you own the key assets that are fundamental to your business, such as your intellectual property. This will include how you manage and protect your business data (GDPR) You should ensure that your key legal documentation is up to date and fit for purpose, this includes:
• Directors’ and Employees Contracts
• Employee Handbook
• Health and Safety Policies
• Trading Terms and Conditions of Business
It can save you a significant amount of money if a presale legal review of your key trading documents and partnership/shareholder agreements is undertaken.
Once you are ready to embark on the sale process it is vital that you protect your confidential information by preparing a non-disclosure agreement, before anything is revealed to the buyer. You need to keep in mind that a potential buyer may decide not to proceed and without the appropriate legal protections in place, they could walk away with and potentially exploit your key business information. We regularly prepare this type of agreement for sellers in order to safely exchange information.
For further information on selling or buying a business, contact Kaye Whitby, Partner in the Corporate and Commercial team at SAS Daniels on or email 01244 305900 firstname.lastname@example.org. Kaye Whitby Partner in the Corporate and Commercial team