When you embark on buying or selling a business you may find it very helpful to get some professional advice at a very early stage from your solicitor and accountant.
You are likely to be asked a lot of questions about your intentions and the motivation behind them.
Why you are selling?
Is it the right time to sell?
Do you intend to sell all of your business and its assets? Would you be better off keeping your premises and letting them to your buyer?
Are you selling your business as a going concern, if so have you considered the TUPE Regulations? (For more information see our Employment section).
If you cease trading what are the consequences for you customers? What happens to your existing contracts: can you get out of them or can they be transferred to your buyer. Are you going to be able to sell your stock? How much is it going to cost to make your staff redundant?
Have you given thought as to what disclosures you are going to have to make in your sale of business agreement and what warranties and guarantees your buyer is likely to require?
What are the tax implications of your sale? (These could be complicated if you are in a partnership, particularly if the partners have unequal shares). Will you be able to secure Entrepreneurs Relief to reduce the liability for Capital Gains Tax?
If you are a limited company what happens to your company? Is the company to be taken over by your buyer? If not what steps are to be taken and over how long to wind it down and eventually dissolve it?
Do you intend to continue to trade elsewhere? Have you thought about your buyer’s reaction to your plans, especially if this within the locality of the premises you are selling to him?
How should you buy the business? (There are a number of options for the legal structure: sole trader, partnership or a limited company).
Should you buy or should you rent premises?. Often it can be cheaper and certainly more secure to buy the freehold and pay a mortgage on it than to pay the passing rent, Landlord’s insurance and the Landlord’s service charge. Conversely you may wish to keep your operations flexible and be able to move as your business changes and grows.
Is the purchase price reasonable? Have you had advice on the past few years accounts, the state of the plant and machinery and fixtures and fittings included in the sale and the current stock levels?
What enquiries do you want your Solicitor and Accountant to make?
Are you going to get full disclosure from the seller backed up with the appropriate warranties? Who is going to undertake due diligence?
Are you going to want a covenant from the seller not to compete locally with you, for how long and within what radius?
What assistance and/or training are you going to get from the seller in the run up to and immediately post completion?
What arrangements have you made for a smooth handover of the business? Can you persuade the seller to enter into obligations to deal with any matters outstanding on completion within a specified period of time? Can undertakings be obtained from the seller or perhaps a financial retention or bond to ensure performance of these obligations?
In short there are a great many things to think about and whilst this list is not exhaustive we hope it gives you food for thought. If you would like more information or a quotation please contact a member of our team.