December 12, 2023
Selling a business can be an exciting time, but there are a number of key considerations and steps that business owners should look to take in order to prepare your business for sale. Our M&A legal experts explore a number of these below.
Valuing your business
Obtaining a realistic valuation of your business is key. Ultimately, you may need to obtain specialist valuation advice, but speaking with your existing accountants will be a good starting point. It is important that you have an idea of the value of your business before you engage in any sale negotiations with a potential buyer.
Confidentiality agreement
Always have a confidentiality agreement or NDA available to be signed by a potential buyer before you start providing them with information in relation to your business.
Up-to-date financial information
Make sure that your annual accounts are up to date. Most buyers will conduct an extensive financial due diligence exercise, so it is important that your accounts and other financial information is up to date and readily available to a potential buyer and their professional advisors.
Due diligence
In addition to financial due diligence, the potential buyer will undoubtedly ask for copies of a variety of documents including contracts of employment, contracts/terms of business with suppliers and customers, insurance policies and details of any recent or ongoing claims or complaints. You should make sure that this information is readily available to the potential buyer and their professional advisors. This should help to speed up the process and enable it to go more smoothly, again inspiring confidence in your buyer.
Good corporate governance
Make sure that your Companies House and other filings (including HMRC) are up to date. A potential buyer will pick up on any filings that are not up to date as part of their due diligence exercise, so the more that you can do to address this beforehand the better. It also inspires more confidence in a buyer if things are in good order from a corporate governance perspective.
Managing cash and debt
Make sure to deal with any aged debt as soon as you can. A buyer may try to reduce the price or pull out of the deal entirely if you have a lot of aged debt and a poor cash position. Managing these aspects of your business is good practice, whether or not you intend to sell.
Tax advice
It can be helpful to obtain tax advice. There are often alternative ways in which to structure the sale of your business and tax advice will probably influence which option you go for.
You can find more information in our Selling a Business guide, or contact Siobhan Williams, on 029 20829 124 | swilliams@darwingray.com for a free initial discussion around the sale of your business.
I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”
Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”
We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”
An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”
PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”
We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”
Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”
My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”
