We are all familiar with the concept of buying and selling a house and all of the preparation work that goes into it. Long before a solicitor or an estate agent is instructed we prepare our house to make it as marketable as possible; we de-clutter the kitchen, paint the walls and make sure those squeaky doors get fixed to ensure our house is in the best possible condition it can be.
All of this work not only helps to attract a buyer but also makes the sale process that follows as smooth as possible and the process of selling your business should not be any different. Long before an agent is engaged some general housekeeping needs to take place to ensure there are no skeletons in the company closet. Not only can this make the sale process smoother but failing to do so could result in protracted negotiations, a deal falling through or at worst; a claim for breach of contract.
As the seller you will be expected to provide warranties in relation to how your business has been operated and run. These warranties are contractual promises about the state of your business and cover a broad range of topics including your; employees, company assets, premises, intellectual property rights, contracts, suppliers, customers, accounts and taxation. If any of these warranties are found to be untrue, the buyer could bring a claim against you for breach of contract which could result in you paying significant sums to defend a claim or compensate a buyer.
Even if there are no issues with warranties, a failure to plan for a sale can protract negotiations and prolong the procedure as a buyer’s solicitor may raise multiple enquiries until they are completely satisfied as to the affairs of the business. A failure to provide adequate responses can have a negative impact on your sale, from reducing the sale value to the buyer withdrawing. Just as with a house sale, there is no contractual obligation to proceed until exchange which occurs long after your business goes on the market.
So what should you be doing before putting your business on the market?
One of the key things you should do is speak to your accountant and make sure that all of your business accounts are accurate and up to date. This should not be an issue as these are often well maintained but you should make sure any concerns or issues are addressed before a sale takes place.
Secondly, you need to scrutinise and evaluate your business through the eyes of a prospective buyer to consider and address any concerns that may help maximise your sale opportunity.
How does your solicitor fit into the process?
If needed, we can help with the process of evaluating your business. We offer a pre-sale due diligence service where we approach your business from a buyer’s perspective. We consider all aspects of the business and report to you on any areas of concern. As a part of this service we will also advise on what you can do to improve the business to make it not only more appealing to a buyer but minimise your risks in the transaction and make for a smooth sale when you do find that perfect buyer.
For more information or advice on selling your business please feel free to contact me on 01604 828282 or via email