GETTING THE BEST PRICE FOR YOUR BUSINESS
13 March 2019
Selling a business usually occurs only once in a manager or owner’s lifetime and you have to get it right the first time.
In my experience an understanding of the buying and selling process is vital to not only choosing a buyer but in negotiating the right deal for you.
Consider selling your business a few years prior to the actual intended disposal date. Planning in advance will help you maximise value. Be clear about your reasons for selling and the result you hope to achieve.
Pick the right time – having regard to both the economy and the performance of the business.
Getting the right
Advice Choosing the right advisors can ease and speed the process and reduce the stressful aspects. It can allow you to focus on running the business whilst they deal with the legal and financial process.
Preparing the Business for a Sale
You want to present the business in the best possible light to the buyer;
- A good financial record
- A business compliant with its legal obligations
- Assets which are well maintained
The Buyer wants to acquire a business with minimal risk; it is wise to ensure that any informal contracts are formalised in writing, contracts of employment are in place for all employees and key employees are incentivised to remain with the business. Reduce dependency on single large customers or suppliers.
Marketing the Business
Consider possible Buyers, such as competitors, suppliers or customers, your own management team. Sign a confidentiality agreement before discussions commence.
Accepting the right offer
Does the Buyer have funding in place? What form will payment take? Cash consideration at completion is always the safest option. If payment is to be staggered and dependent on the future performance of the business then make sure you will retain some form of management control. You may be asked to stay on and work with the business but you will not be in control. You will be agreeing not to compete with the business for a number of years.
Agree the Heads of Terms these include an exclusivity agreement confirming you will not negotiate with anyone else. If you need any assistance in the selling process, consider getting in touch with our merger and acquisition lawyers in Manchester and Lancashire.
Completing the Deal
The Buyer’s offer will be subject to satisfactory legal and financial due diligence undertaken by the Buyer’s accountants and legal advisors. You will be asked to warrant statements about the business and legal advice on these is key as these must be truthful and correct. The process can take many months. If you are looking to buy or sell a business it is vital to take advice at an early stage. Shahin Akhtar has extensive experience of business sales and purchases.
For further information and advice please contact one of our commercial lawyers in Manchester or Lancashire.
Shahin Akhtar on 01254 297130