How to Prepare a Business for Sale

Are You Ready to Sell Your Business?

Many companies are structured according to the vision of its owners and are reliant on them to function. Is your company capable of surviving without you? If you can roadmap how the company will continue to prosper once you have stepped down, you may be able to achieve a higher sale price.

Ensuring you have a strong managerial team who can lead the firm under its new ownership and steer it to success will be of great advantage when  attracting a buyer. 

The Benefits of a Comprehensive Plan to Sell Your Company

When preparing to sell your business, the first thing to consider is putting together a comprehensive plan. There are many advantages of this, including:

• Identifying Strengths and Weaknesses: Developing a business sale plan lets you put yourself in the shoes of prospective buyers. Understanding what they will be looking for and what may put them off can help you make your firm look more attractive. 
• Preparing for Pitfalls: The process of selling a company can sometimes be complex. Identifying potential problems and working out how to solve them beforehand will make everything more straightforward. 
• Having the Answers: Potential buyers will typically ask the same series of questions so having all the right responses to hand will cut down on lost time. 

Sourcing the Right Guidance: Having the right legal advice in place can have a huge impact on the outcome of the sale. It’s therefore important to do your research and appoint a solicitor at the planning stage to ensure all eventualities have been considered.

With a thorough plan to sell your company in place, you can get on with the important task of getting everything ready. There are lots of things to consider, which makes obtaining specialist legal advice essential. Here are our thoughts on how to prepare a business for sale:

1. Understand the Value of Your Company

One of the most important factors involved in preparing to sell your business is having a clear idea of how much your company is worth. If you ask for too much then you will be unlikely to find a buyer. Undervalue your firm and you risk losing out on funds which should rightfully be yours. It is a delicate balancing act.

You should therefore consult an independent business valuation expert who can help you get an accurate sense of how much your business is worth. They may also be able to recommend quick and easy ways to enhance this figure further. 

2. Define Your Objectives 

If you do not have a clear indication of what you hope to achieve from the transaction, you will not be able to determine what success looks like. Perhaps the wellbeing of your staff is your ultimate priority, or you just want to achieve the highest price.

Seeking guidance from a specialist law firm can help you understand your priorities. Your solicitors will also develop a comprehensive strategy designed to achieve your objectives. 

3. Get Finances & Paperworks in Order

It is common for businesses to have their last three years’ accounts available for buyers to review. The more information you can give them, the better they will feel about the transaction. Be ready with answers to frequently asked questions such as profit margins, return on investment potential, and who your customers are.

Ensure all licences which are crucial to the operation of your business are not allowed to lapse and be able to present this information when asked. If you have any third-party agreements such as commercial leases or contracts, these should be available as well. 

4. Refine Employment Contracts

Identify who your key employees are and ensure they are firmly locked into the business. Keep them informed of developments and bought into the idea of selling. Their continued involvement could prove essential to a successful transaction.

You should also make sure all policies and procedures are up-to-date to minimise the risk of a claim from employees. If you need to have restrictive covenants in place, check they are still active and binding. 

5. Consider Tax Efficiencies

Another element to be aware of when preparing to sell your business is to minimise your eventual tax liability once the transaction has completed. Decide whether you will opt for a share sale or asset sale and which is most suitable for your circumstances. Your solicitor will be able to guide you with this.

There are various tax relief systems in place so be sure to take advantage of them. Consider personal wealth protection as well such as setting up trusts. 

The Importance of the Right Business Sale Legal Advice

Obtaining the right legal advice can have a huge impact on the business sale process. Not only do you want to work with a firm which has a great deal of experience in the field, but you also need representation from someone who is results-driven and will work tirelessly to deliver your desired outcome. 

There are many facets to selling a business which cover several legal disciplines — such as TUPE regulations, commercial contracts, and tax issues. You should therefore contact a full service law firm who can call on the expertise of multiple departments to deliver a holistic service. If this is not done, you run the risk of receiving disjointed advice which could over-complicate the sales process.  

If you are at all unsure about how to prepare a business for sale, you can rely on Thursfields to help. Our solicitors have a wealth of experience in the field and have facilitated transactions often worth in excess of a million pounds. We have helped clients from all areas of industry sell their company for the best possible figure.

Our mergers and acquisitions department has been instructed onto transactions involving both domestic and international buyers, meaning we are adept at handling situations involving multiple jurisdictions. Their expertise has regularly proved vital to securing a positive result for clients.

As a full service law firm, we can call on the expertise of solicitors from a wide range of legal disciplines. This ensures we can provide you with a holistic service which takes care of everything. 
Thursfields strikes the right balance between being results-oriented while also looking after the needs of our clients. We work to understand your exact requirements and what you hope to achieve, before using our skill and knowledge to deliver your desired outcome. Contact us today to find out more.