A must-have guide for business owners: everything you need to know about selling your business
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How to prepare your business for sale and arrange the legal advice you need.
Geoff Hazlewood, corporate and commercial partner at Ashtons Legal and Sally Challinor commercial property partner, answer your FAQs about selling your business.
Q: How can I prepare my business for sale?
A: Start by getting your paperwork in order. Ensure contracts, property/environmental/operational/waste permits, client and employee records, and trading terms are up-to-date. Don’t underestimate how long this can take – allow yourself ample time.
Unless you already have a buyer identified, you will need help to market your business and find a buyer. We would usually expect your accountant or corporate finance advisor to help with that. Once you’ve found a buyer, contact us to help complete the sale.
We’ll explain what documents you need, negotiate a sale agreement, and ensure that balanced seller and buyer protections are in place. It’s unlikely we will reach an agreement on the first draft, but we’ll work with the buyer’s lawyers to negotiate terms that you’re happy with.
Q: What legal pitfalls should I watch out for?
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A: Before negotiations begin, it’s important to make sure you have a non-disclosure agreement in place. This ensures confidentiality when sharing sensitive business information with your buyer as part of the due diligence process.
Care should be taken, firstly to ensure that the warranties are balanced – avoiding warranties that are outside of your knowledge, forward-looking or simply too broad in scope and secondly that any disclosures against the warranties are sufficiently detailed. Vague or incomplete disclosures could be ineffective and you could be liable to pay back some of the money you received from the sale.
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Q: Will I need to sell my premises?
A: Not always – you can hold on to them. Alternatively, you can set up a short-term lease with the buyer while deciding what to do with them. Consult our property experts to learn your options.
If you have a property lease, your landlord may need to approve the transfer of the lease depending on what your lease says. Don’t leave this until the last minute, especially if your buyer is a new business. The landlord may need a number of references for the buyer before it can be approved.
If you’ve applied for a rental holiday during Covid-19, all back rent must be paid in full before the business is handed over.
It’s important to have any company-owned property valued. You need to understand how much your company’s assets are worth.
Q: Do I need to inform current employees of the sale?
A: This can depend on a couple of things. With some deal structures, in particular assets sales, there is a legal requirement for employees to be consulted. This is not required in most share sales and in most cases, owners prefer to keep things under wraps until the deal is agreed and certain to happen.
Q: How long will it take to complete the sale?
A: This depends on the size of your business, the number of parties involved, and the complexity of the business and deal structure. Some deals are time-sensitive and have to happen quickly - so as long as we are made aware of any deadlines, we can help you to meet them and can let you know if they are realistic.
Q: When should I seek legal advice?
A: As soon as possible. A solicitor can help you avoid lengthy delays and prevent you from making any costly mistakes.
The more involved we are in your business from the start, the easier it will be to offer advice. You can benefit from the expertise of all our specialist legal teams to help you save money, manage, grow, and sell your business.
Q: How can I access the legal advice I need during lockdown?
A: Contact us to book a consultation. We can arrange a meeting over video call or phone. Throughout Covid-19 we’ve continued to deliver uninterrupted service to our clients and remain fully operational.
Ashtons Legal has offices in Bury St Edmunds, Cambridge, Ipswich, Norwich and a satellite office in Leeds, so are ideally placed to help any East Anglian or national businesses.
Visit ashtonslegal.co.uk for more information or to book an appointment. Call 0330 404 0749.