Selling Your Business? a Brief Guide

It can take a little time to ensure that your business is ready to offer to market in its best shape.Nicola Wood, our commercial director, provides a useful checklist of steps to cover.

Even the healthiest business needs to be prepared for sale in advance, with active support from your accountant, solicitor and, where the business has borrowings, lending relationship manager.

A buyer will expect the seller to be able to provide the information described below in a reasonably organised manner.

Our list is not exhaustive, and you will be adapt it to fit the nature of your business. You will also want to have a chat with your lawyer and selling agent as to whether you are going to ask any potential buyer to agree to keep your information confidential, until a sale is completed.

Information likely to be required for sale:

• Business accounts for at least the past three years. Ask your accountant in good time to ensure that you have these ready to present to your selling agent or, if agreed, potential buyers.
• Management accounts, with target working capital, as above.
• A schedule of all current employees, showing the information needed by a buyer to take the employees on following a business transfer, including rates of pay, holiday entitlement and records of absence. You will also be asked for a copy of the employment contract that you use, with any staff handbook and other relevant policies.
• Confirmation of any pensions scheme provided by the business.
• Details of all properties from which the business trades, including whether they are held freehold or leasehold.
• If leasehold, will the business need its landlord’s consent to transfer the site to a buyer? Speak to your solicitor sooner rather than later here. Obtaining third party consents can impact timescales. There is usually a lot more information to be collated in the sale of a leasehold property, including information as to rents and service charge. Your solicitor will be able to advise.
• Know how to produce your property paperwork, including title deeds, energy performance certificates, asbestos survey reports, fire risk assessments and health and safety information. Your agent and solicitor will be able to help you here, ensuring that a buyer receives everything its needs to complete its property due diligence.
• If your business has carried out works to its premises, be prepared to supply all necessary planning consents and building regulation completion certificates, to demonstrate the works are fully compliant.
• Insurance(s) details, both for the properties and the business.
• Any permits or licenses needed to run the business will need to be made available, for example, for the sale of alcohol. A buyer will want to know that these can be transferred to it.
• All supply and customer contracts, which (in the hospitality industry) will include confirmation of advance bookings and deposits taken.
• Details of all equipment used that is not owned outright by the business, for example, leased kitchen equipment, printers or copiers. Can these agreements transfer to a buyer, or will it need to make its own arrangements with suppliers direct?

You can see that there is a lot to think about when preparing any business for sale. We do recommend starting the process sooner rather than later, with the benefit of legal advice and input from your accountant.

If there are issues to be explained to a buyer, your sale will proceed much more smoothly if you know what they are and have a proposal for dealing with them, rather than finding yourself on the back foot.

Contact us: call 01229 580596 or email info@progressionsolicitors.com