Apart from the initial decision to sell, composing a business sale contract is the most important part of the process. There’s significantly more to a business sale than price, and the finer details can make or break a deal. We can help you understand the transferral of assets such as property, equipment and naming rights. Identify all liabilities such as leases and creditors. Employee arrangements. The list goes on.
Even prior to the sale, there are important steps to undertake such as reviewing your existing contracts and agreements. Creating a pack of documents for potential buyers can also simplify the process and increase the chances of a sale. Including default confidentiality agreements, offer and acceptance forms and even contracts of sale will give buyers a greater confidence in your business.
Considerations to have prior to selling your business
When selling your business, there are many considerations that you will need to assess and evaluate to enable the smooth transition of the sale of your business to another person. Business owners who plan on how and when they want to sell their business often reap the most benefits when selling. These business owners will often implement strategic plans in order to ensure that their business is in the best condition to earn more profits.
Such strategic plans that enable the business to become more attractive to buyers may include but are not limited to:
- Creating and marketing a unique product
- Having a strong online presence
- Having a reputation for high-quality goods and services
- Developing plans for business growth
- Having contracts in place with distributors and clients
- Signing short- or long-term leases – depending on your industry and what is considered preferable
By implementing strategies and acting upon the advice of legal and accountancy experts, you will be able to mould your business into one that is more attractive for buyers in the market.
What can you do if you do not want to sell your business?
Selling your business may not always be in your best interests due to a downturn in the market or due to the fact that your business is not performing as well as it had previously. Some business owners with a strong attachment to their business also may prefer to remain involved in the business to some extent.
Our commercial team at GLG Legal are able to advise you on the alternative options that are available if you do not wish to sell, such options include but are not limited to:
- Selling assets
- Becoming a public company
- Developing exit strategies
What happens when a purchaser wishes to conduct due diligence investigations on your business?
When purchasing a business, the purchaser will most likely conduct due diligence investigations on your business under the advice of their lawyers. Prior to the commencement of the investigations, the period of time and what investigations the purchaser will be conducting will be outlined in a letter of intent.
Due diligence investigations enable the purchaser of your business to assess whether your business is worthwhile to purchaser. They will often request access to documents regarding the finance, assets, and operations of your business.
As the purchaser will be seeing confidential information of your business, it is important to seek the advice from a lawyer who will be able to assist in the drafting of a non-disclosure agreement. This will prevent the purchaser from disclosing information they come across in their investigations to your competitors.
What legal documents are required in selling a business?
Depending on how large your business is, how it is structured, and how you wish to sell the business will impact on what legal documents you will require when selling your business. Our lawyers at GLG Legal are experts in business sales and have drafted the appropriate legal documents for numerous businesses for their sale.
Legal documents that you may require include but are not limited to:
- Franchise agreements
- Employment contracts
- Leases and sub-leases of both equipment and premises
- Contracts with clients and distributors
- The sale contract
As many businesses rely upon oral agreements, it is important to ensure that such agreements are drawn up into legal documentation prior to selling your business as this will provide certainty to the purchaser that such arrangements exist.
There are several considerations involved in selling a business and it is important that you seek advice to ensure that your business and your personal interests are protected when doing so. We understand at GLG Legal that selling a business can be a confusing process and we aim to simplify that by providing straightforward and unique advice suited to your circumstances.
If you are thinking about selling a business or are in the process of selling your business and need advice, contact our commercial team who will be happy to assist you in the sale of your business.