We’ve written about the ‘5 legal tips to set up a business’ but what about when it comes to selling up? There are numerous reasons why a business owner may wish to sell their company: some want to try something new, some lose the passion and naturally come to the end of the road, or some simply want to cash in and retire early (if said business has done well enough)!

For some, it does just come down to money and the job role of being an entrepreneur, but for others, a business holds much more sentiment and the sale is much more than just a cash affair, such as long-standing family businesses.

Here are my 5 tips when selling your business to ensure that you get the most for your money, achieve the healthiest profit and have a smooth, successful transaction.

It is always best to make sure the structure and ownership of the business is crystal clear. If it is too reliant on you individually then you will have to arrange the structure to increase stability, thus making it more ‘buyable’, otherwise the buyer will have no one to turn to after you leave. Having a strong management structure behind you will ensure that a sale is achieved quicker and closer to your expected sale valuation. Before you go to marker it’s key to have a succession plan in place.

Another aspect to ponder is if the business operates through a limited structure, you will have to decide whether you want to sell the shares or just the assets.

  • Tidy Up Your Company

We don’t just mean get the sweeping brush out and give it a quick once over – although that might help the valuation too – we mean tidy up your business in terms of any outstanding issues, including staffing, contracts and finances. Having such issues ironed out makes your business much more attractive to possible buyers.

It is good practice to carry out your own internal due diligence procedure before your potential buyer finds it in theirs. Finding any issues early means you can resolve them in your own time to maximise the efficiency of your sale. Putting your business to a buyer with an impending employment tribunal or big VAT bill isn’t going to work in your favour. Also important to formalise any arrangements with contracts, including for customers, employees and suppliers.

agreement on selling company

  • Cash Flow

An important area to prioritise when you are getting organised is your working capital. There are various ways to do this such as reducing stock levels and managing your creditors. It may be possible to sell off pieces of equipment that don’t get used to reduce your debt and perhaps renegotiate your supply contracts to shave off those perks you included.

Planning ahead is vital so that your company has a financial record to entice a buyer. Including healthy sales forecasts, which are realistic and evidenced it has to be said, will increase confidence amongst potential buyers.

  • Get a True Business Valuation

This will help to give you a true reflection when it comes to gauging offers and also give you an idea of what you can raise. It almost goes without saying that it’s key to use a professional who has experience in dealing with selling businesses, particularly in your sector. Make sure you use an objective, independent source to give you a realistic valuation. It may also help you to identify potential weaknesses within your business that you may be able to address prior to selling.

  • Right Advisers On-Board

An experienced solicitor will inform you of the structure of the deal whether it is a share sale and/or asset sale, making sure you understand all the implications of each. We have a highly experienced team here who have dealt with all manner of sales of business in different sectors and of different sizes. An experienced corporate solicitor will take you through the whole process and organise all of the legal paperwork to ensure there are no unnecessary complications. A good solicitor will also ensure that you have the necessary post-completion protection.

  • Exit Strategy

Having a well-thought-out exit strategy is crucial. This includes understanding the timing of the sale, knowing the market conditions, and having a clear idea of what will happen after the sale. This can help in making the transition smoother and ensure that the business continues to operate successfully even after the sale.

Alongside a solicitor, it will be important for you to have the expertise of an accountant, surveyor and bank.

If you are looking to sell your company whether it is assets or shares then get in touch with me or a member of our specialist commercial team. We also deal with mergers and acquisitions and have the legal expertise to help you benefit in your transaction.

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