Table of Contents
In Short
- A well-prepared business attracts higher offers and a smoother sale process. Start by obtaining a professional valuation and organising financial records.
- Protecting intellectual property, securing key staff, and ensuring compliance with regulations can significantly enhance business value.
- Addressing legal risks and preparing for due diligence can help avoid delays and maximise buyer confidence.
Tips for Businesses
Plan early to increase your business’s value before selling. Ensure financial records are accurate, contracts are up to date, and intellectual property is protected. Resolve legal issues and compliance gaps to reassure buyers. A well-documented and legally sound business will make negotiations easier and help secure the best possible sale price.
Selling a business is a significant milestone for any business owner. Whether you’re looking to retire, pursue new ventures or simply cash in your hard work to date, you’ll want to receive the best price possible for your company. The key to achieving this is enhancing your business appeal before putting it on the market. This article will explore some valuable ways to maximise the legal value of your business before sale.
Carry Out a Valuation
The first step is to obtain a professional valuation. There is no one-size-fits-all approach, and a valuer will consider all factors relating to the business, including employees, reputation, and liabilities.
LegalVision’s Buying a Business: Guide to Negotiating Terms allows you to protect yourself by understanding which key terms to negotiate when buying a business.
To avoid under or overvaluing the company, business owners can request the help of a professional.
Get Your Financials Right
Understandably, prospective buyers will scrutinise your financial records, so ensuring the financials are in order is essential.
For example, you should:
- ensure bookkeeping is up to date and accurate;
- prepare detailed financial statements; and
- consider having your financial statements audited by a reputable accounting firm.
Clean and well-organised financial records demonstrate transparency and professionalism, instilling confidence in potential buyers.
Continue reading this article below the formProtect Your Intellectual Property
Intellectual Property (IP) can be a valuable asset. IP can be protected through various registrations. For example, trademarks can be utilised to safeguard your distinctive logo or brand name and other branding elements.
Prepare for Due Diligence
Almost all buyers will want to conduct due diligence on the company they intend to purchase to ensure they achieve good value. It is best practice to anticipate the due diligence process by preparing key documents in advance.
For example, you can:
- collect all important contracts and agreements, including those with your suppliers and customers;
- prepare a list of all assets and liabilities attached to your business;
- document your customer base; and
- ensure that your filings at Companies House are in order and current.
Preparing for the due diligence process can demonstrate professionalism and speed up the sale process.
Secure Your Key Staff
A buyer often wants to ensure that the business succeeds without you present. It is worth ensuring that a core group of employees or a management team who can run the company without your presence are in place.
Resolve Legal Issues and Ensure Compliance
Unresolved legal issues can be a significant red flag for buyers. Things to look out for include:
- resolve any ongoing litigation or disputes;
- comply with all relevant regulations and industry standards;
- address any environmental or safety issues;
- obtain all necessary licenses and permits;
- conduct a thorough review of your employment practices to ensure compliance with employment laws; and
- ensure that your business adheres to data protection laws.
Key Takeaways
Start preparing your business for sale well in advance to maximise its value. Obtain a professional valuation to set realistic expectations and identify areas for improvement. Ensure your financial records are accurate, up-to-date, and professionally presented.
You should also protect and document all intellectual property to enhance your business’s value and ensure all employment contracts are in order. Finally, you should resolve any legal issues and fully comply with all relevant regulations.
If you need help valuing your business, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes, being transparent about any issues your business faces is crucial. Hiding problems can lead to legal troubles after the sale and may cause the deal to fall through if discovered during due diligence.
Maintaining confidentiality is crucial to avoid unsettling employees, customers, and suppliers. Steps you can take include having potential buyers sign non-disclosure agreements and conducting meetings with them off-site.
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