{"id":179400,"date":"2023-02-01T02:49:41","date_gmt":"2023-02-01T02:49:41","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=179400"},"modified":"2023-04-27T08:05:22","modified_gmt":"2023-04-27T07:05:22","slug":"legal-considerations-before-selling","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/business-sale-purchase\/legal-considerations-before-selling\/","title":{"rendered":"Legal Considerations Before Selling Your Company in the UK"},"content":{"rendered":"

Selling your company can be an exciting time. After much hard work and effort, you may negotiate a profitable and satisfying deal. However, the process of selling your business is a complex one, and there are a few legal considerations that need addressing first. This article will explore key legal considerations before signing on the dotted line and formally selling your UK business.<\/span><\/p>\n

Ensuring a Fair Business Valuation<\/span><\/h2>\n

Naturally, one of the most important aspects of a business sale is to agree on a suitable price.  <\/span><\/p>\n

There are three main ways of <\/span>valuing a UK limited company<\/span><\/a>, which include:<\/span><\/p>\n

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  1. income valuation method<\/b> \u2013 this bases the purchase price on current sale figures, pricing, and predictions as to future income and profit. Naturally, predictions as to future business income can be uncertain, and you should take care to ensure the figure is within accurate bounds;<\/span><\/li>\n
  2. asset valuation method <\/b>\u2013 typically, this method suits companies with large amounts of assets. This valuation method seeks to value physical assets (such as machinery, stock and vehicles) and non-physical assets (such as goodwill and intellectual property). There is little point in using this method if your business has few assets to its name; and<\/span><\/li>\n
  3. market value approach<\/b> \u2013 this seeks to compare your company to similar businesses in the same industry and geographical area. For example, they may compare an Italian restaurant in London to other Italian restaurants of a similar size within a two-mile radius. The comparison usually involves consideration of average figures for income, expenditure and profit from rival companies.<\/span><\/li>\n<\/ol>\n
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    It is vital to pick the correct valuation method to avoid selling your company to a prospective buyer at an undervalue. <\/span><\/p>\n<\/div>\n

    How and When is the Purchase Price Being Paid?<\/span><\/h2>\n

    Once you have set the purchase price, it is essential to set boundaries on how and when the buyer will pay it.  <\/span><\/p>\n

    Consider the following questions.<\/span><\/p>\n

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    1. Do you want the buyer to pay the whole purchase price at once, or are you happy to receive it in equal instalments?<\/span><\/li>\n
    2. Do you wish to negotiate a purchase price that will increase upon meeting certain conditions? For example, you might negotiate to double the purchase price if the company achieves higher profits within 12 months of sale.<\/span><\/li>\n
    3. How do you wish to receive the purchase monies? For example, many business owners will specify that the amount should be transferred as one lump sum into a specified bank account by a specific date.<\/span><\/li>\n<\/ol>\n

      It is important to remember that negotiating a reasonable purchase price is just the first step. Ensuring that you close any loopholes that allow the purchaser to delay payment unreasonably is also critical.<\/span><\/p>\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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