Think about whether a sale is actually the right path for you and your company. Starting the sales process is a big commitment, so it’s sensible to reflect on your motives for selling, and what your alternatives may be. Consider whether you want to continue with the business for any period post-sale or if you would prefer a clean break. Also question whether it’s the right time to sell, in terms of the market and the lifecycle of your business.
By failing to prepare, you are preparing to fail!
Depending on the current state of your company’s internal systems and controls, you may need to spend at least several months getting your company ready for the sales process. It’s important to consider:
Professional advisers can really add value in assisting with the sale. They will help you to present your company in the best possible light, advise on the valuation of the company, compile an information memorandum for potential investors and can assist with aggregating due diligence information, handling due diligence queries from potential purchasers and negotiating heads of terms. Always take tax advice to ensure that the sale is structured in the best possible way for you. You will also need to appoint a lawyer to assist with the sale agreement. Select advisers that you trust, and that you will have a good working relationship with.
Expect a lot of questions! It’s common for the following to be scrutinised during the due diligence process:
Finally, it’s vital to be transparent during the process. You will be required to provide supporting documentation to verify all the information provided.
Whether you’re selling the trade and assets of your business or a company, you will need some form of sale agreement. Your lawyers and accountants will assist with the drafting of this agreement and make sure you understand the content of the final agreement and the warranties and indemnities which you’re accepting as part of the deal.
It’s worth noting that you should not under-estimate the time involved in selling a business. Due diligence can be time-consuming and high-pressured, so it’s vital that you have the management resources available to deal with this at the same time as running your business.