There are a great many matters to consider when selling a business and some of the main things which need to be considered have been set out below. To ensure that the sale of business agreement reflects all the terms that have been agreed, this should be prepared/reviewed by an experienced business lawyer.
“Consider carefully what you are disclosing to prospective Buyers”
The Buyer needs to be provided with enough information to enable it to make an informed decision as to whether to purchase your business or not and determine the price it wants to pay, but not enough to enable it to set up a competing business. For that reason, any information disclosed to the Buyer should be done so following execution of a carefully drafted non-disclosure agreement by the Buyer.
It is usual to provide information about business liabilities, the employees and their entitlements, the current lease(s) and any licenses required to operate the business, etc. There are instances where a Seller can be held responsible for liabilities that were not disclosed when the Buyer purchased the business and for providing inaccurate information so, if you are uncertain as to what you should be disclosing, you should always seek appropriate advice.
“Check your Lease”
Do you lease your business premises? If so, you will need to check the terms of your lease to ensure that you have the ability to assign the lease to the new Buyer.
Leases generally have terms which require you to obtain the landlord’s consent before you assign the lease to another party. The premises may be of substantial value to the Buyer and if you are unable to transfer your lease, you may not be able to sell your business. If you are unsure of your ability to assign, it would be worthwhile having your lease reviewed by a business lawyer.
“Be clear exactly what is being sold”
The agreement should make clear exactly what you are selling, which may include any or all of the plant and equipment, business assets, business records, and intellectual property etc. As the Seller, it is your responsibility to set out for the Buyer a list of exactly what it is that you are selling as well as detailing any assets of the business that are not been sold. These should be detailed in the contract as ‘excluded assets’.
“Seek Advice”
Selling a business can be an extremely tricky and risky process and depending on the nature of the business, there may be certain factors which need to be taken into account in the sale of your business.
Your accountant will be able to assist you get your finances in order and an experienced business lawyer will be able to prepare your sale agreement, answer your questions and assist you through the entire sale process.
