The decision to sell your business is a big one and knowing where and how to start can be overwhelming. Whether you’re planning to exit soon, or simply planning ahead, thorough preparation can make all the difference.

At Bhayani Law, we work closely with business owners to guide them through this process. Here’s what we recommend you should consider when preparing your business for sale:

1. Get Your House in Order

Due diligence is an integral step in the company sale process, so getting ahead and making sure things are in order will help keep the process running smoothly. Conducting internal due diligence ahead of time means that you can uncover and rectify issues. This greatly strengthens your position in negotiations, protects value, and manages the risk of unforeseen obstacles popping up that could threaten the transaction. When the time comes for the buyer to conduct their due diligence process, you will already have key documents ready in an organised fashion, speeding up the due diligence timeline and maximising the likelihood of a successful sale.

A large proportion of a buyer’s due diligence will focus on the contracts in your business: such as customer contracts, supplier contracts, and employee arrangements. In terms of customer and supplier contracts:

• Are they signed?
• Do they need renewing?
• Do they have provisions that would kick-in on a change of ownership?

Working with a legal team to check these out will ensure that any onerous arrangements that may be unappealing to buyers are at least known and maybe re-negotiated ahead of time. The removal of “red flags” before release of the information to the buyer, and a clear due diligence report, gives a buyer comfort to proceed can help greatly to preserve the value of the business. In terms of employee arrangements: do all staff have valid employment contracts which are up to date with the law and reflect notice periods, restrictive covenants, and benefits? It would also be useful to address any ongoing HR issues that may need resolving before a sale, as a stable workforce is a big selling point for a business. Finally, where this is an asset sale, TUPE (Transfer of Undertakings) provisions will apply, so advice from an employment law specialist will be key here.

This is a non-exhaustive list of the types of documents you will need to gather and review:

• Company incorporation documents (e.g. articles of association).
• Share certificates.

• Material customer and supplier contracts.

• Employment contracts.
• Staff handbook and HR policies.

• Leases and recent property valuations or surveys.
• Insurance policies.

Decide on a Sale Structure that will Suit You and the Buyer

Deciding whether you intend to sell the shares, or the assets of your company will influence how the sale is structured. Selling all the shares of your company will mean the buyer acquires the company as a whole, including all of its assets, contracts, and liabilities. In an asset sale the buyer can choose exactly which assets, rights, and liabilities are transferred.

There are also tax consequences related to sale structure which need to be addressed early on.

Are you open to earn outs, deferred consideration and do you want a role in the business post completion? Working out what you want from the sale means that you can target the right kind of buyers early, helping the transaction to progress smoothly from the outset.

3. Assemble the Right Team

When preparing to sell your business, assembling the right team from the outset is crucial to achieving the best possible outcome. Business brokers and corporate finance teams can help with the marketing aspect. Alongside them you will need support from an expert Company and Commercial Lawyer, and Accountant or Tax Advisor. Having the right advisors in place helps minimise risk and ensures that the process runs smoothly. An experienced lawyer will guide you through every stage, from preparing for due diligence to negotiating and completing the Sale and Purchase Agreement. An experienced accountant is equally important, as the structure and terms of the sale can significantly affect the amount of tax you will ultimately pay.

At Bhayani Law, we understand the value of working closely with you and your wider professional team to protect your interests and deliver the right result. We have extensive experience collaborating with accountants and tax specialists to ensure that all aspects of the sale process are aligned, and if needed, we can make recommendations of corporate finance teams and accountants who are well-suited to your needs.

How can Bhayani Law Help?

So, if you’re thinking about selling your business, the commercial and employment law specialists at Bhayani Law are on hand to help you:

• Review and prepare documentation
• Resolve any employment or contractual issues
• Navigate the due diligence and disclosure process
• Negotiate and finalise the Sale & Purchase Agreements

To get started with the process of selling your business, reach out to the experts at Bhayani Law on 0333 888 1360 or email [email protected] for advice.