Top 5 tips When Preparing Your Business for Sale
Plan Plan Plan
Plan in advance because it can take a long time, even several months, to sell your business. It is important not to rush and take the steps necessary to make the business an appealing asset. Take the time to make informed decisions and maximise your chance of achieving your aspirational exit value, rather than rushing a sale and realising that you have missed out on considerable profit.
Ensure that you have the following in place so that both parties are covered from liabilities:
- Employment contracts with your employees
- Contracts with any other staff (e.g. casual workers and self-employed consultants)
- A staff handbook which satisfies the minimum legal requirements
- Contracts or terms and conditions with your customers and suppliers
- An efficient invoicing and debt collection process
Organise Material Contracts
Legal contracts, such as supplier and client contracts, leases, licence agreements and permits, will be scrutinised by the buyer during in the due diligence process of the sale. Ensure that all of these documents are up-to-date and organised clearly so that buyers can inspect them. Include any intellectual property as the buyer will want to use these freely once they take over.
Keep the Business Ticking
It is easy to get bogged down with the laborious tasks related to the sale of the business, but you have advisers (accountants, lawyers and tax advisers) in place so utilise them! The business needs to be run smoothly until the completion of the sale, so don't neglect the day to day running of the business as this is where its value lies.
Make Yourself Dispensable
You may feel that your business would be nothing without you but you definitely do not want a buyer to think that. A buyer doesn't want to pay for a business where the value leaves when you do. Make sure you provide all information and share any intricacies of the business so that the transition from you to the buyer is as seamless as can be.
This is not legal advice; it is intended to provide information of general interest about current legal issues.