There are many reasons why you may consider selling your business. You may have multiple locations/brands and want to concentrate on only certain aspects. You may want to start a new project. You may want to step into your well-earned retirement.Whatever the reason, you should begin planning your sale now.
We recommend that you start by looking at your business with a critical eye. It is important to seek advice at an early stage even if you are simply considering a potential sale in the future. Speak to your accountant, find out what shape your business is in and determine a reasonable valuation for your business.
Start discussing the process with lawyers. If you are not sure of the process to sell your business, a lawyer can explain this to you. Discuss the investigations a potential buyer will undertake and what would be expected of you. Talk though any concerns you have and whether there is anything you can do right away.
It is better to address potential issues now instead of during the sale process. Whilst this is not always possible in every scenario, it will help to make the sale process smoother. Having these discussions at an early stage will also prepare you for the investigations that a buyer will undertake. This can be a lengthy process and sometimes it can seem quite daunting. A buyer will investigate your business to ascertain whether they wish to proceed to purchase. If you take the time now to consider the type of queries that could be raised, there will be fewer surprises later down the line.
Having a head start is always useful. If you are able to answer a buyer’s queries quickly and provide supporting documentation efficiently, your business will look strong. You will also provide the buyer with confidence that they are purchasing a well-organised company.
Here are our top tips to get you started:
- Prepare, prepare, prepare: consider whether there are any areas that would concern you if you were a buyer. Could you tighten up your policies and procedures? Do you have copies of all your insurance documents? Do you have copies of your important contracts and agreements? There is no such thing as being too prepared. Make sure you know where to find key documentation. Consider putting together a physical or electronic folder of those key documents. If you do not have documentation, can you obtain copies?
- Companies House filings: it may have been a while since you viewed your own company’s entry on Companies House. Now is the perfect time to have a look. Consider whether any filings have been missed over the years. Can you rectify this now? Check that the details of directors and persons with significant control are up to date and correct. Cross reference Companies House to your statutory books to make sure they mirror each other.
- Statutory Books: review your statutory books and make sure they are up to date. If information is missing, complete this now. Your accountant may hold your statutory books on the company’s behalf. Speak to your accountant and make sure nothing is missing.
- Policies, licences and consents: consider the policies, licences and consents that you are required to have under legislation and those specific to your industry. Can you find copies of everything you need? Is anything missing and can you address this now?
- Disputes: No one likes to be involved in a dispute but disputes can easily arise when you are running a business. If there is an ongoing dispute, or a complaint which could potentially turn into a dispute, it is important to keep a record. This is key area where a potential buyer will investigate. The more information and evidence you can provide, the more comfort you can give a potential buyer.
If you are considering selling your business or you need advice regarding your company, contact Woodfines Corporate and Commercial team at CommercialDept@woodfines.co.uk
