Most business owners have an expectation of what their exit plans are for their business whether a trade sale, passing to the next generation of family or retirement. Sometimes a sale may be as a result of an unexpected opportunity to sell or simply an offer that is too good to refuse. Whatever the particular situation a few simple steps can help achieve the best possible return on a sale. Paul Tyrer of our Corporate team explains some of the key steps that can improve the price achieved and reduce the amount of time spent on selling your business.
Key steps in grooming your business for sale:
- It is important to plan ahead. Ask yourself are you in a position to sell now if a strategic purchaser makes an unsolicited approach to buy your business?
- Identify employees that are key to the business – explore ways of keeping them engaged and incentivised in the business both pre and post-completion. Make sure that their service contracts have sufficient periods of notice and suitable restrictive covenants, if necessary
- If there are no key employees then consider whether recruitment is needed to ensure business continuity
- Review your business property – are you coming to the end of your lease? Is there an impending rent review or break clause? Does the title need to be registered or updated?
- Ensure third party contracts with material suppliers and customers are renewed; consider whether any such agreements are affected by a change of control
- Are all intellectual property rights sufficiently protected? Consider whether any trade marks or patents need registration, domain names extending, non-disclosure arrangements formalising
- Make sure all business documentation is reviewed and up to date – do your terms and conditions need changing, staff handbooks updating?
- Compliance – make sure that all regulatory requirements are met such as Companies House filings, accounting records, data protection registration, health and safety / environmental audits.
Preparation can pay dividends when the time does eventually come to sell your business and many of the steps listed above are a matter of good business practice in any event.