Selling your business, whether you’re looking to retire, move on to a new venture, or free up some capital, can be a big step. To make sure everything goes smoothly and you get a good result, it’s important to get your ducks in a row. That means getting both your accountant and your lawyer involved early on.
Getting your business ready for sale, also called “vendor due diligence,” can help attract better quality buyers. Here’s what you need to do:
- Financial Accounts: Make sure your financial records are up-to-date and ready to show to a potential buyer. Your accountant can help with this.
- Business Valuation: Get a professional valuation of your business. An accountant or independent valuer can help you work out a fair price.
- Legal Documentation: It’s crucial to have all your legal paperwork in order. This is where your lawyer comes in. Key documents include:
- Lease Agreements: If you’re leasing your business premises, check that the lease has enough time left on it (including any rights to renew) to give a potential buyer confidence. You’ll also need to consider how the lease will be transferred to the new owner. This usually needs the landlord’s okay, and they can’t object without a good reason. Do note, even if you transfer the lease, you might still be liable if the new tenant doesn’t meet their obligations, unless the landlord agrees to waive your obligations – but they don’t have to do that.
- Employment Agreements: Ensure all employment contracts and records are current, complete, and signed by both you and your employees.
- Supplier and Customer Contracts: Like your lease, check that these contracts are up-to-date, have a reasonable time left on them, and can be transferred to a purchaser. You may need to get supplier/customer consent to the transfer.
- Intellectual Property: Make sure any intellectual property, like trademarks, is properly protected and that all registrations are current.
- Dispute Resolution: Sort out any outstanding issues with employees, suppliers, or customers, as these could put off potential buyers.
- Online Presence: Ensure your website and social media are professional, up-to-date, and present your business in the best possible light.
Once you’ve prepared your business, you’ll need to decide how to market it. You might want to talk to a business broker to help you find buyers and get the best price. Your accountant and lawyer can also help if you’re selling to a family member or employee, especially if the sale will happen in stages.
When you find a buyer, the Agreement for Sale and Purchase sets out the terms of the sale. It’s vital to get your lawyer involved early on to make sure the agreement reflects what you want. The terms of the deal, including the price, are likely to be negotiated and your lawyer can handle this for you.
The Agreement will usually have conditions that need to be met before the sale can go through. Common ones include the buyer getting finance, doing their due diligence, and getting the landlord’s approval for the lease transfer (if there is one). Due diligence is where the buyer checks everything about your business, including the finances and paperwork. Your thorough preparation for sale will make due diligence much quicker and easier.
How can we help?
Getting good legal advice is crucial when selling your business. Talk to our team of experienced business lawyers – it can save a lot of headaches down the track. Contact us today to discuss how we can help.
RELATED SERVICES
Business
From start-up to selling, choose a strategic partner in business. More Info
RELATED PEOPLE
