The financial legal advice you need | Selling your business.
Selling your business can be stressful, full of uncertainty and costly.
It doesn’t have to be this way.
Getting legal advice early on makes good financial sense when selling your business. You will know that my business is built on the foundation of ‘prevention is better than cure’. The times I have seen things go wrong in the sale of a business, more often than not they could have been avoided if the seller had spoken with their business lawyer early on in the process to get help with planning and strategy.
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 my experience, so they can avoid the pit-falls. I aim to ensure my clients save themselves the pain, stress and financial costs that can add up when things go wrong.
My number one rule is: when you start thinking about selling your business talk to your business lawyer and accountant.
Your accountant will help ensure your financials are in order. Your accountant and business lawyer will help you get clarity about what you are offering for sale and help you arrive at a price for your business. Your business lawyer will also ensure all your contracts and other legal documents and procedures are up to date and in place, prepare the contract of sale and act for you on the sale.
Getting your financials in order
Your accountant will help you get your financials in order so that you can make an informed assessment of what your 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.
Clarity around what you are selling and price
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 it is not uncommon for business owners to find ownership of their domain is still with their web designer!). Knowing these things early on in the process will help you arrive at a price for the sale.
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.
At this planning stage it helps to have legal advice and financial advice. It also helps to bring your legal and accounting team together. I will often jump on to a call with the client’s accountant to drill down on the issues, ventilate our respective concerns, and see what we can do to get on the same page. More often than not we are able to understand each other’s concerns so that we can come up with a game plan that is in your best interests.
Ensuring your contracts and agreements are in place
Your business lawyer will make sure that all your contracts and agreements are up to date and current.
You need to make sure that your employment contracts are in place for your team; supplier agreements should be reviewed; any arrangements you have with contractors need to be recorded properly in contractor agreements. Don't leave these things until the last minute because having to deal with loose ends can cause delays and increase costs.
Your business lawyer can advise you about things like the lease of your business premises (if you have one) and what the process is for assigning the lease to a purchaser. This needs to be in order because it adds real value to your business.
If your business needs compliance procedures and operating policies in place, you will need to make sure these are up to date.
Preparing the contract of sale
Once you are clear on all the above, and once you have negotiated terms (and price!) your business lawyer can finalise your sale contract.
Getting your business lawyer on board early means they know what you’re planning to do, and they can start the process of preparing your sale contract. These things can take time, so you want to be sure you give your lawyer enough time to have the contract ready to go when you and your new purchaser are ready to go.
Once the contract of sale is finalised the remainder of the steps to close the sale are procedural and your business lawyer can take it from there.
You have worked hard to build your business, and you deserve to achieve the best sale price possible when it’s time to sell. Seeking legal advice from your business lawyer early on when you are preparing to sell your business will help you to do this and really makes sound financial sense.
You can read more about the important steps you need to know when selling your business in these blogs: ‘6 Legal Advice Tips You Need When Selling Your Business’ and ‘Selling Up? Here’s The Legal Low Down’.
Our online guide ‘Legal Advice for Small Business l Ultimate Guide’ is another great resource for small business owners to help you ensure your small business is legally compliant and protected. You can also reach out to us here to book in a free chat at anytime.
