Preparing Your Business For Sale
If you are planning on selling your business or company in the medium term then taking the time to prepare for that process well in advance will pay dividends. It can stop unwanted pitfalls arising and therefore save you time and money in the sale process.
A solicitor and accountant experienced in the process will also help greatly but from many years of doing this kind of work I can recount examples of stumbling blocks cropping up in the process which could have been avoided with more planning before the sale process started.
A buyer will ordinarily, either itself or through its accountants, do what is known as “due diligence” on the business it is buying. This can involve a financial investigation and also a list of questions or enquiries which are dealt with as part of the legal process. The fewer issues which are raised as a result of this process the better for you as seller and so time spent preparing for it is time well spent. Here are some examples of things to look at and address:
- Make sure your accounts and tax returns are all up to date and that you have a well-filed set of papers supporting them available to produce at short notice;
- All key contracts with customers and suppliers should be in writing and offer the protection which the company sensibly requires. Have them reviewed yourself if necessary;
- All your filings at Companies House should be up to date and your statutory records (or company books as they are sometimes known) should be up to date and well maintained;
- Ensure all employees have suitable contracts of employment which comply with current legislation and that any statutory pensions obligations have been put in place and are well documented;
- All agreements for goods or equipment on finance or lease terms should be available to inspect including full copies of all applicable terms and conditions. Just having the front page will lead to a search for the small print as it will be needed.
- This is by no means an exhaustive list but the final thing to stress is do not overlook any assets which you might consider to be personal to you and which you do wish to sell but which might be on the company’s balance sheet. These might be a car, buildings or, as I once discovered, a racehorse! There might be accounting and tax issues to overcome in ensuring they are taken out of the business and the earlier they are looked at the better.