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Selling a business can be a complicated and time-consuming process. However, if you are a UK business owner looking to sell your company, there are several steps you can take to ensure a smooth and successful sale. This article will explore some of the first steps you should take when selling your UK business to ensure a safe, secure and profitable sales process.
1. Determine Your Company’s Value
The first step to selling your UK business is determining its value, which involves thoroughly evaluating your business’ financial and non-financial assets. Accordingly, you may consider hiring a professional business valuation firm to help you with this process.
A business valuation will consider some of the following factors:
- revenue;
- cash flow;
- assets;
- liabilities, loans and debts; and
- profitability.
2. Prepare Your Business for Sale
Once you have determined your business’ value and set an asking price, the next step is to prepare your business for sale. This will involve several tasks, including:
- gathering all relevant financial and legal documentation, including tax returns, bank statements, financial agreements and any contracts your business may have entered into;
- cleaning up your company’s financials to ensure they are up-to-date. This may involve paying off any outstanding debts or liabilities, reducing expenses and improving cash flow;
- addressing any legal issues that may impact the sale of your business, such as pending legal claims, regulatory investigations or environmental controversies; and
- making any necessary repairs or upgrades to your company’s physical assets, such as buildings, equipment or vehicles.
By preparing your business for sale, you can present it in the best possible light to potential buyers, increasing the likelihood of a successful sale.
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.
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3. Identify Potential Buyers
Once your business is ready for sale, the next step is identifying prospective buyers. There are several ways to do this, including:
- listing your business with a business broker who specialises in selling businesses like yours;
- advertising your company for sale through online marketplaces or industry-specific publications; and
- networking with other business owners, investors or industry experts interested in acquiring your business.
4. Ensure Potential Purchasers Sign a Confidentiality Agreement
There are several reasons why getting a potential purchaser to agree to the terms of a confidentiality agreement (otherwise known as a non-disclosure agreement) is essential. These include the following:
- signatories agree to keep all confidential information related to your business, including financial data, customers lists and trade secrets, private and to avoid disclosing it elsewhere;
- creates trust between you and the potential purchaser meaning any document exchange and negotiations can be held in confidence;
- avoids future legal action due to the purchaser treating themselves as bound by the confidentiality agreement, keeping your information safe and secure.
Naturally, you may treat any occasion upon which a potential business purchaser refuses to sign a confidentiality agreement as a red flag. At the very least, you should avoid providing them with excessive information and documentation.
Key Takeaways
Selling your UK business involves various steps, which should occur in a particular order. An expert lawyer and business broker can help you achieve the above steps quickly and efficiently. Notably, each step needs time and consideration, as any mistake (such as an undervaluation of your company) can cost you thousands of pounds.
If you need assistance with the first steps within a company sale, our experienced business sale 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, the same vital steps apply to most businesses, as most prospective buyers will use a similar due diligence process. Whether you own an established or growing business, any interested buyer will seek relevant financial information before finalising a deal.
You can do the above steps quickly, but depending on your circumstances, the best buyer may be worth the wait.
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