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Top Tips when Selling a Business

When contemplating purchasing a business, you have some major issues to sort through.

The following list is only some of them.

  • Take tax and legal advice before selling

  • Decide if you want to sell the Share holding (Share Sale) or if you want to sell just the Assets, Name and Goodwill.

  • Interview and obtain quotations from Solicitors to handle the legal work.

  • Make sure all of your accounting systems, management accounts, statutory accounts etc are up to date.

  • Make sure that all of your staff Contracts of Employments have been issued.

  • Apoint a Business Broker (such as Biz Sales) to help find a buyer and maintain confidentiality.

  • Decide which assets are or are not included in the sale.

  • Work to agreed timescales and aim for a Completion Date.

  • Ensure all information provided for a potential purchaser is accurate - you can be assured that everything will be thoroughly scrutinised!

  • Make sure that any outstanding tax issues, disputes etc are fully resolved.

  • Ensure all contracts are in correct legal form for employees, customers and suppliers.

  • Make sure that any intangible assets such as copyrights, patents, trademarks are correctly protected.

  • Consider reigning back on capital investment to maximise profits, preferably 3 years before selling.

  • Don't let the business decline whilst searching for a buyer or during the period leading up to legal completion.

  • Don't give exclusivity until an offer has been accepted.

  • Type of Deal. What kind of deal will it be - purchasing the assets of the business or purchasing the stock?

  • Confidentiality. If the vendor will be sharing confidential information, such as financial statements and customer lists, the buyer probably will be asked to sign a Confidentiality Agreement.

  • Letters of Intent. Consider whether signing a letter of intent makes sense before you invest a great deal of time and money.

  • Due Diligence. Make sure you have thoroughly checked out the business you are buying—its financial performance, assets, liabilities, contracts, employees and more. Click here to view a sample due diligence checklist.

  • Definitive Agreement. You will need a comprehensive definitive agreement setting forth the terms of the acquisition.