Before embarking on a project for the sale of your business:
- take tax advice on the structure of the deal. Should you sell shares or trade and assets? Can you benefit from tax reliefs such as entrepreneurs’ relief on a share sale?
- take professional advice on the valuation of the shares;
- liaise early on with any lenders about any finance facilities or security over the business, its assets or its shares. Experience tells us that dealing with financing and security arrangements can cause delays;
- engage a law firm that specialises in this type of work – getting your professional team on board early allows them to do a better job for you;
- enter into an NDA with the proposed buyer to protect confidential information of the business and prevent disclosure of the proposed business sale; and
- agree heads of terms, however succinct, which include an exclusivity period and address the headline terms of the proposed deal, such as price and payment and perhaps the formula or relevant accounts for the calculation of any future sums that may be due under a completion accounts or earn-out arrangement.
Once key terms of the deal are agreed you should focus on the due diligence process. The buyer wants to understand what it is purchasing. Time would be well spent organising and, if necessary, undertaking some housekeeping and tidying the company’s affairs to simplify the due diligence process.
An efficient due diligence process also means that the parties can have a better picture of what seller warranties will be required and any indemnities that need to be negotiated to address any specific risks to the buyer. It also means a more streamlined disclosure process which involves you, as the seller, making specific disclosures to the buyer about anything that is inconsistent with any of the warranties that you are being asked to give to the buyer under the purchase agreement.
This advice should help you to plan your proposed sale and understand how the process can be streamlined with up front planning. We are highly experienced in selling businesses across a range of sectors.
Please get in touch if you would like any advice about selling your business.