If you have plans to one day sell your business, there are a few things that you need to consider from a legal point of view before undertaking a sale.
These range from making sure the right documents or contracts are up to date to instructing the best solicitor.
To help you with any eventual sale, we have put together some helpful tips.
Achieving the best price
An important part of the sale process is due diligence. During this assessment, the company or investor buying your company will ensure that your business is in good legal and financial health.
This will involve assessing any liabilities and obligations that your business may have and ensuring that there is no risk to themselves or their investment.
If you can clearly demonstrate that your business is healthy and not a risk, then you should find it easier to negotiate a better asking price and there should, in most cases, be less delay in completing a sale.
The importance of warranties
As part of the deal, you will need to agree to a sale contract. This will reflect your initial heads of terms and will afford you protection against any potential future claims, should they arise.
As part of this, the contract should include warranties that provide assurances that the business does not have any ongoing issues, such as unpaid debts or payments to employees.
This disclosure process should help give a clean break once the business is sold.
To ensure there is no legal comeback, it is important to fully disclose any obligations or issues that could affect the future of the business under its new ownership.
Things to consider include the recent dismissal of staff, long-term contracts or agreements or disputes with suppliers or customers.
By being open and honest during a sale, you are allowing the buyer to base their decisions on the realities of the business at the point of sale.
This should help prevent a claim against you in future, as the new owner will have been in full possession of the facts before completing the transaction.
Need help selling a business? Find out how our experience Commercial Law team can assist you.