Selling your hard-earned business is a potential exit strategy once you’re ready to close your books to start a new chapter in your life. There are many reasons a business owner would want to let go of their company. To ensure a smooth-sailing transition of power and assets, you need to know which items will be included in your negotiations.
What to consider when selling your company
For any critical business decision, it’s best to cover every ground to avoid having any potential legal issues in the future. It’s necessary to have your documents in order through a professional business solicitor, where you need to know which aspects of the transaction to focus on. Doing so will ensure that all the considerations will be included in your official documents.
Here are four things you should consider before letting go of your company:
1. Concerned parties
Every official written contract needs to include all the concerned parties involved in the transaction. Although it can seem like a straightforward requirement, plenty of legal issues can come up from incorrect party details. It’s important to identify all the stakeholders in the agreement to avoid any inconsistencies in transferring ownership and liabilities.
2. Full inventory of sale items
“Selling your business” is a general term that can have different implications, depending on your contract. You should include the specifics of what you’re selling, such as your business records, licenses, trade secrets, or physical assets. These sale items will vary if you’re in a particular industry. For example, being a private practice for healthcare may also require you to attach your patient database. It’s your responsibility to record and indicate all the potential value that a buyer will get from purchasing your establishment.
3. Leasing term
If your business operates under a pre-existing lease, it’s necessary to disclose this to your company buyer. However, if your lease terms don’t give you the right to transfer, you may need to facilitate a different arrangement with your landlord and buyer. Regardless of your rights, you generally need to obtain your landlord’s consent before allowing another party to take over your business. Since these transactions usually contain a considerable fee, you’ll need to confirm these ‘operating and transfer’ costs beforehand to include them in your asking price.
4. Disclosure of relevant information
Besides your leasing terms and inventory of sale items, you must also present other relevant information to a purchaser of your company. This includes outstanding debts, business licenses, employee databases, and other details that are vital in running your company. Failure to do so could constitute enough grounds to terminate your contract.
For this reason, it’s best to consult a business solicitor, if there are some facts and figures that haven’t been included in your disclosure requirements.
Conclusion
Unfortunately, not many businesses can last under the same management for years and years. It can be an incompatibility with the current market, complications with managers, or just the end of the road for a business owner. However, that doesn’t mean a company should just shut down. There’s a way to continue your business endeavour – even if you’re no longer willing to handle it yourself. With a reliable business solicitor by your side, you can create an exit strategy that will benefit you, your business, and your entire staff.
At GLG Legal, our team can provide the best legal guidance on your company’s transition for an exit strategy. With our diverse experience in legal concerns, we can accommodate different business owners in varying industries. If you need reliable lawyers to help sell your company, contact us on (07) 3161 9555 today!