How do you prepare your business for a sale?

Here are 5 tips to help you:

Getting your business ready to be sold,5 top tips

It goes without saying that grooming (or preparing) your business for sale takes time and effort - which means you need to get started well in advance to reap the rewards of your labour! 

Getting your business ready for sale can not only improve the sale price you achieve but can also reduce the time to complete the transaction. Most of the steps you will take are simply good business practice, however you will also feel confident that you can capture the interest of more qualified potential purchasers and you will be passing on the business in the best possible condition. 

Here are our five top tips for ensuring your business is ready for sale:

Find out what your business is worth

Do you know what value your business might achieve in the current environment? Do your research ahead by speaking to a specialist valuation accountant specifically about your own business together with gleaning a general understanding of the market and what other comparable businesses may have achieved locally.

Get a head start on the due diligence process

Prospective purchasers will want to see that your paperwork including financial records and accounts, contracts, leases and Companies House filings are all in order and that your business stands up to the close scrutiny of their due diligence team. Aside from satisfying your purchaser's advisors, it also reflects well on the efficiency of your business operations and provides reassurance to the purchaser on what they are intending to buy.

Management structure and procedures

A business that cannot function without you at the helm is of little value to anyone else. One issue which a prospective purchaser will keenly consider is the cost of replacing key staff members.  Consider your existing organisation structure and put a management team in place. Take time to specify their roles and responsibilities, train them properly and develop a network of procedures and policies to be adhered to. Having a solid management framework to pass across to your potential purchaser eases the process for all involved.

Employment contracts   

Ensure that employment contracts, staff handbooks and policies are all up to date and comply with the latest legislation. Sound employee documentation minimises the risk of employment claims whilst you are operating the business and also prevents a potential purchaser from finding a reason to reduce the purchase price during the sale process.

Ensure correct ownership of assets

Check who really owns the assets of the business. It is often the case that asset ownership can be split between different companies or individuals which could cause a problem when this comes to light later during the sale process. Check freehold property ownership, premises leases and commercial hiring agreements carefully.

Whilst the decision to sell your business will be largely driven by your personal and financial objectives, it is always worth remembering that you never know when the opportunity for a sale might arise -  simply because an offer may come along which is too good to pass up! Bear our top tips in mind to make sure that the sale of your business completes as quickly and efficiently as possible.

For further information and legal advice on selling a company please contact our Company Commercial Team on info@hcsolicitors.co.uk or call 01733 882800.

Author

Olivia Chalmers, Solicitor

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.