Are there alternatives to selling my business?
There may be a range of exit options that might be a better option than selling, for example retaining an element of financial or management control rather than selling the business outright.
What is included in a business sale?
Normally a sale will be of either the assets of the business such as the customer database or specific equipment or the shares of the company whether this is all of the shares or a partial sale.
What are the options for receiving payment when selling my business?
To make the sale more appealing to the buyer, the seller might need to be flexible about when they receive payment. The buyer may insist on making instalment payments to better manage their cash flow or want to hold back monies whilst they check that the promises the seller has made about the business are correct.
What should I think of before selling my business?
It is important to ask yourself when is the right time for me to sell is there a potential purchaser in mind does the business have a strong financial record and is it doing well do I want to retain any control?
What are the key stages of selling a business?
Initial agreement: once the price the buyer is willing to pay is agreed a non-binding agreement (called heads of terms) is often drawn up which states that the deal remains subject to the buyer and seller agreeing the terms of a purchase agreement. Due diligence: the buyer will take out a full review of the business; the books, contracts, employees, assets and property of the business. This may result in the buyer wanting to negotiate on the sale price. Purchase agreement: this is the most important document in any commercial transaction and sets out the promises the buyer makes to the seller regarding the business being sold. Completion: the seller needs to ensure the agreement is signed and the purchase price is received before handing over the business.
I don’t agree to the promises requested by the buyer, what can I do?
If the seller can’t stand by the promises requested by the buyer in the purchase agreement, they need to supply a separate letter (known as a ‘disclosure letter’) setting out where the promises cannot be met or are inaccurate.
What is a disclosure letter?
A disclosure letter sets out the promises that cannot be met by the seller or are inaccurate. If the buyer has been informed of inconsistencies with the promises given in the purchase agreement, the buyer will not be able to later sue the seller for breach of contract.
When do I need to review my terms of business?
An old set of contracts or an agreement ‘borrowed’ from a competitor or another business can be as dangerous as a set of badly drafted terms. It is important to keep standard terms of business up to date, particularly when legislation and court decisions alter the legal landscape, which they frequently do.
My business deals with businesses and consumers. Can I use the same terms and conditions?
If a business trades with consumers there a raft of legislative protection which means businesses have to be far more even handed in their approach. Using the same set of terms for both businesses and consumers leaves businesses with too few protections or clauses which cannot be enforced. It is therefore important that terms are correctly tailored towards the particular client base.
How do I ensure my business terms are enforceable?
A clear, well drafted set of terms covering the potential areas of dispute is often enough to avoid a claim. A good lawyer will easily spot any unenforceable terms so it is good practice to get these reviewed by a legal professional.