If you are looking to sell your company it is important to make sure it is 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. The issues below frequently crop up.
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.
2. 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.
3. 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 to and customers of the business.
4. 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.
6. 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.
7. 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.
This blog was written by Michael Stewart
DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.