Selling your Business: The Seven Things You Need to Do First

There are many reasons you could be looking to sell your business in 2024.  Maybe you want to free up some capital to pursue other ventures.  Maybe you are retiring.  Maybe the last few years have simply made you realise you want to do other things.

Whatever your reason, getting your business ready for sale is an important step to ensure you maximise the purchase price you may receive, and enable a smooth transition to the new owner with minimal stress to your employees – and yourself.

With that, here are our top ten tips for preparing to sell your business:

1. Get your House in Order

Do you have up-to-date accounts and other financial information?  Is your lease documentation current and complete?  Do you have a solid business plan in place?  Are there any problems with employees that need to be addressed?  Are your assets in good working order?   Is all registrable intellectual property validly registered?  Do you have binding contracts in place with key suppliers and customers?  These are all questions you need to start asking yourself to ensure your business is in a good condition for sale.

2. Talk to your Advisors

We’re not just talking about your trusted legal advisor.  Usually before you start discussions with your legal team, you should have worked through the prospects of a sale and potential financial and tax implications with your accountant.   You will also want to discuss the sale with your business banker.  Finally, you may wish to consider engaging a business broker, who can help you to set a price and negotiate with potential buyers.  We have some great contacts in these areas who we can highly recommend if needed.

3. Shares or Assets?

There are two ways you can sell your business.  You can sell the assets of your business as a going concern (this includes the business name and any business premises lease), or you can sell the entity that owns your business assets – e.g. the shares in your company.  There are potential benefits and risks involved in each option, and it’s important you talk to your advisors early to determine what is best for you.

4. Protect Yourself

You’re about to hand over a lot of your confidential information to a third party to enable them to assess whether or not they want to purchase, and at what price.  Make sure you have a robust Confidentiality Agreement/Non-Disclosure Agreement in place to ensure your valuable information doesn’t end up in the wrong hands.

5. Package It Up

Consider preparing an information pack – sometimes called an Information Memorandum – which gives potential purchasers the data and information they will need to make an informed decision as to whether or not to purchase your business.  The pack will potentially include financial information from the last few years, a copy of your lease, business history and information on the business assets.  Just make sure your confidential information is protected (see step 5).

6. Stay Positive

These things take time.  You may not have the flurry of activity you anticipated in the first few weeks, but stick with it and try to refrain from selling in a rush, which may mean you accept a purchase price that is lower than what your business is actually worth.

7. Come See Us

You have an offer on the table – great news!  We would always recommend getting your solicitor to look over the Agreement for Sale and Purchase before signing.  If that is not possible – you’re under pressure to sign or are just super excited – it would be worth including a condition in the Agreement for solicitor’s approval.  This gives us a chance to look over the Agreement after it is signed and make any changes necessary to protect you.  Rest assured, we’re not out to make changes just for the sake of it.

What next?

Just because an Agreement for Sale and Purchase has been signed, that doesn’t mean it’s time for rest.  We will outline the sale process in another article.

We are happy to discuss anything in this article that may have captured your attention.  Feel free to get in touch.