Selling a business, no matter what size, is a big undertaking requiring plenty of consideration and planning. As an owner or partner, you’ll be looking to get the best possible deal and achieving that means having everything in place from a legal point of view. So your first port of call should be with a team of commercial solicitors with a successful track record in business sales and JPP Law offer a free introductory call which can be utilised before you have found a buyer. It’s a worthwhile exercise because we can provide hints and tips on preparing your business for sale from a legal perspective which can help to facilitate a smooth transaction when the time comes.
In this article, we look at the legal considerations and offer some tips on how to sell a business quickly.
Get Ready to Sell
Before you begin looking for buyers, you must have all your affairs in order so you can move fast in the event of a selling opportunity. Preparing your business for sale means making sure all the relevant documents are in order including legal documents and contracts, financial statements and tax records. Every potential buyer will want to see these documents to assess the financial position of the business. During a free no-obligation 15-minute consultation with JPP Law, one of our experienced solicitors can run through a checklist of the documents you’ll need and anything else you might need to prepare before putting the business on the market.
Valuing the business
The next step is to put a valuation on the business. While your accountant should be able to help with this, a professional business broker will be needed for bigger or more complex business arrangements. Again, a commercial solicitor will be able to assist with certain aspects of this.
A lot of different factors can affect the valuation and there many different ways to value a business, depending on the sector and the circumstances at valuation. At its most basic, you can calculate the book value by subtracting liabilities from assets, but this doesn’t take account of intangible assets, such as the potential profitability of the company in future.
Marketing the Business for Sale
Marketing the business will depend on the size and complexity of the venture. But, no matter how small the business, by developing a sound marketing strategy, you can attract more buyers, accelerate the sales process and hopefully secure a better deal.
Start by addressing any cosmetic or operational difficulties, before putting together some marketing materials designed to show your business in the best light.
Consider the type of buyer. There are four main categories of buyers: individuals, financial buyers, strategic buyers and people already involved with the business. If you have a niche business with just a few possible buyers (perhaps competitors), it may be in your interest to contact them directly. Otherwise use a combination of marketing approaches for maximum visibility and coverage.
- Word of mouth
- Print, local papers and trade journals
- Direct marketing
- Business-for-sale websites
- Social media platforms
- Industry networks
- Business brokers
Finalising the Deal
Once you’ve attracted a buyer, that’s when the serious negotiations will begin. Be prepared to talk terms, price and contingencies. Being transparent and responsive during this stage should keep things moving apace towards a successful conclusion. If you have partners or shareholders, they should be kept up to date on progress – you may also need their permission to finalise the sale. Here again, a good commercial solicitor can help with any shareholders agreement stipulations, as well as drawing up the final contract for the sale.
Not every business sale has a successful conclusion. If, after all this, you still haven’t found a buyer, you may need to look to alternative options, such as a Management Buy Out (MBO), or even an asset liquidation, whereby you sell off property, stock or equipment, to pay debts or generate cash. Certainly, in the case of an MBO, the services of an experienced solicitor can help streamline the process and safeguard the interest of all parties involved.
Selling a business can be a complicated process. Get the right legal advice from the outset by contacting JPP Law’s corporate and commercial law team. Start by getting in touch today for your free consultation.
