Preparing to sell your business

Whether or not you are starting to think about retirement, if you plan to sell your business in the future then there are some sensible preparatory steps that you can take to help achieve the best price for your business and sell on favourable terms.  It is worth investing time and effort to ensure that your business is presented as attractively as possible before you start to market it to potential purchasers.

Putting your business in good order before you offer it for sale will also help to prevent delays and will reduce the scope for re-negotiation by the purchaser while the deal goes through the acquisition process.

Depending on the nature of your business and its history, this is an exercise that might take a year or more to complete with optimal results.   The sooner you make a start the better.

Assess any business weaknesses with a buyer’s eye

At an early stage you should conduct a thorough review of your business’s internal and external affairs to identify any matters that could affect its attractiveness to potential purchasers. Be sure to look at your business from an outsider’s perspective.     It may be painful to view things objectively through the eyes of a prospective buyer, but it is a very important exercise.

Consider whether there are any adjustments that can be made that might make your business more attractive. Some businesses operate in a particularly niche market, so it is worth considering at an early stage due diligence to identify any potential problems selling to a third party.

If you find it difficult to be impartial about something that you have invested so much time, effort in, as well as capital perhaps, it may be worth your while engaging the services of an external consultant to help you in this regard.

Know your key assets .. and protect them

An area of interest to any potential purchaser will be the assets of the business, whether physical premises and equipment, intellectual property, trade secrets and your key personnel.  Identify and seek to address any issues concerning your business premises or other core assets.   You may need to take steps to protect assets and tie in key people with performance incentives.  Indeed, you may in some circumstances only wish to sell some of the assets of the business, in which case your solicitor should be able to help you with restructuring implications.

Whatever the value that you hope to realise, there are likely to be tax liabilities which can be mitigated if you plan well in advance, taking accountancy advice as appropriate.

Get your house in order

Beyond your front line operation, don’t overlook your back office, take some time to review such matters as bookkeeping, accounts, operational systems, documentation & and record-keeping, as well as ensuring that your regulatory and compliance affairs are up to the mark.

Your ability to demonstrate that your financial books & records are in good order is of vital importance.   You will want to show that there are no discrepancies in your accounts and that your business’s financial health is evident from them. A disorganised set of accounts can be an indicator of deeper financial problems.

Alongside past performance, a purchaser will want confirmation that the future business pipeline is healthy.   In this context, they will want to review the commercial contracts and supporting documentation which lie at the heart of how your business makes money.  Your solicitor can help make sure that your contract terms standard templates are up to date, relevant, and fit for purpose.

Throughout the life of your business, you will have entered numerous other agreements in relation business operations, many with financial implications for your business overheads and asset value.  You will have internal policies, a lease or licence of premises, agreements with web hosting and data storage arrangements, insurance, accountants etc.  All such paperwork need to be readily available and up to date in readiness for a buyer’s due diligence enquiries.


Resolve any disputes

If you are currently involved in any disputes with customers, suppliers or staff, then these will need to be dealt with and resolved as soon as possible. At the very least you can expect to be called on to make full disclosure of any ongoing litigation or other disputes.

All these steps will take time, so the earlier you get your solicitor involved, the sooner we can identify issues that might be used by the other side to reduce the price they are willing to pay.

If you are interested by the topic covered by this article is relevant and would like an informal discussion about preparing your business for sale, please contact Bill Montague or one of his commercial team colleagues on 0118 939 3999 or email him at

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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