If you are looking to sell your company this year, one of your New Year resolutions should have been to get the company in good shape for any prospective buyer.
In the same way that you do not run a marathon without adequate preparation, preparing for a company sale can help to avoid a lot of pain during the process and help you to get over the finish line.
A prospective buyer will want to examine the affairs of the company from top to bottom so that they know what they are buying and that the price is right. Set out below are some issues that tend to feature regularly when selling or buying a company.
Have all of your employees got contracts of employment? If so, have they actually signed them? This is particularly important for senior employees as a prospective buyer will want to know that in the event that they leave, the employees have an adequate notice period and restrictions regarding competing with the business of the company where appropriate. Is there a staff handbook and an anti-bribery policy? If so, when was it last updated?
- Terms and conditions.
Are your terms and conditions of business up to date and fit for their purpose? A buyer will want to know that they are fit for use and that they have provided adequate protection in respect of pre completion transactions.
- Customer and supplier contracts.
Do you have binding written contracts with major suppliers and customers? A buyer will look for reassurance as to the stability (and enforceability) of relationships with significant suppliers and customers of the business.
- Where is all the paperwork?
You will be surprised how many businesses cannot lay their hands on the company statutory books, share certificates, leases that govern the occupation of property, pension scheme documents, insurance policies or finance documents. Having these readily available and in good order will save a lot of heartache during the due diligence process.
Have you obtained an asbestos survey in respect of the company’s premises and prepared an asbestos management plan where appropriate? Have written risk assessments been prepared for the purpose of health and safety? Have you complied with the Regulatory Reform (Fire Safety) Order 2005 England and Wales? Do you have an anti bribery policy? A well advised buyer will enquire about all of these matters.
- Accounts and Tax.
Are your accounts and accounting records up to date? Have accounts been filed on time and tax properly accounted for and paid in good time? Have you paid any late filing or late payment penalties? How much of your current debtors figure is realistically realisable? How good are your management accounts? Expect a thorough review by the buyer’s accountants.
- Exit strategy.
Have you taken financial advice so that the sale is structured in the most tax efficient manner for you? This could result in significant savings.
At Ralli we have experience of advising both buyers and seller across numerous industry sectors. For an informal discussion please contact us on 0161 832 6131.