October 7, 2021
We get the best results for our clients by using a seamless, joined-up approach to the sale of your business.
Get professional advice early on – especially from your accountant.
By working with your accountant at least 12—18 months prior to your planned exit from the business, you will be able maximise your profitability on your balance sheet and maximise the sale price. In addition, your accountant will be best-placed to advise you on the most tax-efficient structure for the sale, for instance whether it should be an asset or share sale.
Put your house in order.
A huge part of any business sale is the due diligence process. By considering this early on, and getting your documents organised and ready for disclosure to a potential buyer, you will hopefully shorten the time the transaction takes to complete. Of course, the specific questions raised by prospective buyers will vary and it’s impossible to get everything prepared in advance. However, there are some areas that all buyers will ask about, such as accounts and financial information, key contracts, intellectual property rights, property information and staffing requirements, so some preparatory work will be possible.
Structure the purchase price to maximise the value of the business.
Think more widely than just the payment that you expect to receive on completion. Many transactions include provision for an earn-out, which can be a great tool to be compensated for the profitability of the business you’ve sold, especially if you’re struggling to agree the value of the business with your buyer. The potential downside is that, if the business drops in profitability, you might end up receiving less.
Consider agreeing other ongoing sources of income.
In addition to a potential earn-out provision, think about your assets as a whole and how you can maximise their value and make them work for you. This might include providing consultancy services to the new owners or retaining property and leasing it back to the business.
Prepare proper heads of terms.
We always recommend you have heads of terms in place with your prospective buyer, setting out the key aspects of the deal at the outset. Whilst most provisions in heads of terms are non-binding, they are a useful way to set out key points of the agreement and hopefully minimise opportunity for disputes arising later down the line in relation to key aspects of the deal.
If you are thinking of selling your business, we would be delighted to provide you with support and guidance on how to prepare your business for sale. We can offer a range of support from early-stage due diligence to the completion of the sale. We also use technology wherever we can to simplify the process for you, for example setting up a bespoke, secure data room where you can upload and organise your due diligence information to make it clear and easy for your prospective buyer to access.
If you would like to discuss how we can help you, please contact Stephen Thompson, head of our corporate and commercial teams, on 02920 829 136 or sthompson@darwingray.com.
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