6 legal Advice Tips You Need When Selling Your Business
Selling your business can be overwhelming; stressful, and full of uncertainty.
It doesn’t have to be this way.
With a lot of planning, a good strategy, and the right team around you, selling your business so you are ready for your best next chapter, can be exciting and rewarding (truly!). I have acted for so many clients over the years who are either buying or selling a business, that I have seen what can go wrong time and time again.
If you have been following me for a while (nudge nudge, if you haven’t you can jump over to my Instagram page here and take care of that now!) you will know that my business is built on the foundation of ‘prevention is better than cure’. So all of those times I have seen things go wrong, I can honestly say, hand on heart, that more often than not they could have been avoided with some solid planning and a sound strategy……
So when I am asked by my clients “what do I need to do when I want to sell my business?” I am able to provide advice based on all of that experience, so they can avoid the pit-falls I have seen too many times.
Here are my 6 legal advice tips you need when selling your business:
1. Talk to your Accountant.
Many of you would have heard me say time and time again, having the right team around you is vital in small business. That is just as true when you’re selling as it is when you’re growing and scaling your business.
Your accountant will help you get your financials in order so that you can make an informed assessment of what the business is worth, and then when you’re starting to talk to prospective buyers, your financials are prepared and ready to share within the due diligence period.
2. Legal advice selling a business.
Talk to your business lawyer! Yep, there’s that team again! Get your business lawyer on board early so they know what you’re planning to do, and so they can start the process of preparing your sales contract. These things can take time, so you want to be sure you have everyone on the same page.
3. Know what you’re selling.
Talking to your accountant and your business lawyer will help you get clarity around what you are offering for sale. What’s included in the business? Where does goodwill sit? What plant & equipment do you have? What leases are in place? Do you have ownership of your domain (you should, but I am seeing more often these days business owners who don’t have access to this, because it’s still with their web designer!). These are the sorts of things you need to get your head around, and the sooner the better in this process.
4. Employees.
Talk to them. Let them know what’s happening, and take the time to understand what they want to do. Do they want to stay on? Or are they ready to move on, too? Knowing this will help you in discussions with prospective buyers because you will know what you can (and can’t) offer in terms of training, handovers and so on.
5. Be clear on your next steps.
If you are wanting to move on to set up and drive a new business in the same of similar industry, you will need to be mindful of this when negotiating terms of the sale because it is common for buyers to want to include a restraint or non-compete clause – because let’s face it, if you’re good at what you do a buyer may not want to compete with you!
6. Know your limits.
Knowing what you are prepared to accept both in terms of price and conditions of the sale, will help you to be clear when negotiating with prospective buyers, to not waste anyone’s time. You need to know what you want, what you’ll accept, what you won’t - and why - to be able to move forward with sale negotiations effectively and efficiently.
You don’t want this process to become unnecessarily drawn out, or to become a burden. There is no substitute for planning, and a sound, well-considered strategy going into this process can make all the difference.
Part of the planning, in my view, is to bring the team together. I can’t tell you the number of times a client’s accountant and I jump on to a call together to really drill down on the issues; ventilate our respective concerns, and see what we can do to get on the same page. Sure, we don’t always get there (legal and accounting can have quite the divide sometimes), but honestly, more often than not we are able to understand each other’s concerns enough so that we can come up with a game plan that makes everyone comfortable.
So…. to sum up:
● Get your team of advisors together.
● Know what you’re selling.
● Be clear on your worth.
● Know your bottom line.
● Start with the end in mind. (seriously – know what you want the end result to look like, and then know how to get there).
Good luck! You have worked hard to get to this point, so there is no reason why you shouldn’t be able to enjoy this process and make the most out of it.
If you’d like to reach out to us, please make contact here.
Our resource Legal Advice for Small Business: The Ultimate Guide might also be helpful.