Preparation When Planning to Sell Your Business.

If you are planning to sell our business, this how you start. One will possibly ask you this question – “have you thought this through? ” The first query you would wish to ask yourself is “how much can I get for the company?

The answer to your question depends upon how well you have thought it through because pitfalls exist. This will introduce some early fundamental pitfalls that will not just change the sale price, but also whether you may sell the business at all.

The first thing we must evaluate is precisely what you are selling. Have you been a sole-trader where all responsibilities on you?
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Is this a partnership – Are partners involved have a monetary interest who will need to approve the deal? Is it a private limited company – Is there other investors to take into account and are all willing to sell?
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It is also possible you are thinking about selling a public limited company – In which case is it possible to get all shareholders approval and are there any special interest to factor in?

In each scenario, there are problems to address from the onset that may stop a potential and send the buyer away without looking back.

If selling a sole-trader business, you will need to be mindful of warranties that are implied. These may include undocumented assumptions, which the buyer might be making. One obvious one is that the business can function when the owner already sold it.

If this proves to be not the case then in some specific conditions the buyer of the business can claim their money while keeping the company. Therefore, good preparation vital.

With partnerships and private companies, the biggest problem is coming into an agreement: are all investors and associates entirely in agreement because a change of thoughts half-way through the sale will kill the procedure.

There are specific individual concerns for both partnerships, and private limited companies which need to be addressed right from the beginning and legal advice will be necessary at this stage.

To some extent, a deal involving a public company is much easier, but it also depends on how much of the business the client wants to acquire. If this is 100 %, then prior agreement of most shareholders will be a necessity, but this has to be done carefully to prevent accusations of insider trading and share value distortions.

Some unscrupulous buyers may intentionally support or disarray the seller’s team to push the business to lower its selling price or push it to liquidation so that they can take advantage of the situation.

Agreement from all selling parties is so vital at the onset of the sale as well as setting the sale value or the minimum price for the business.