Selling a Business
Business Law Topics
Selling a Business
A typical approach to selling a business would firstly involve the advice of a business sales broker. Such a specialist can advise in relation to the market, range of financial sale options and financial planning and tax advice to optimise the value of your return. In addition to the financial position, and as can be seen from our other sections, the purchasers of your business will have a number of questions relating to the business itself in the form of legal due diligence. The following is a sample list of the items that will be reviewed and considered during the process of sale:-
- The leases, licences and/or title documents of all premises the business operates from will be reviewed, especially where that premises is owned by the principals of a company in sale
- Each premises will be examined in terms of planning permissions and fire safety compliance, including any work undertaken to it since the purchase or occupation by the business. A planning expert can advise on planning or fire safety issues that might come up in the sale process and how to deal with them as part of the sale process.
- Property insurance, public liability and employers liability insurances and (for retail sales of products) product liability insurances will be checked to make sure they are up to date.
- The intellectual property of the business (trade marks, designs, patents or domain names) will be examined. Any not in the name of the business owner or company would need to either be properly licensed to the Company or transferred as part of the sale process. You would be well advised to consider the tax implications of transfer of these assets into the Company or business for the purposes of sale.
- Employment contracts for the staff will be requested. All employment contracts should be collected and copied. Properly constituted contracts should include a disciplinary process.
- Questions will typically be raised about environmental, waste disposal and packaging regulations.
- Operating cash flow being left in the business or extracted will be discussed. This is usually agreed as part of the overall sale price and based on tax planning
- Bank mandates on the business accounts should be properly organised as these will transfer to the purchasers.
The above is a sample checklist of typical issues that can be encountered in the sale of your business or company. In some instances the list can be less, in others the list of items covered can be more. What is important to realise is that in most cases the checklist may not have an adverse affect on the purchase price for the business. As Vendor however you will be asked to give “warranties” which are contractual promises that legally the business or company is complaint with applicable laws. Theses warranties will potentially expose you as the business vendor to the possibility of claims for compensation after the sale has closed if matters are not in fact in order.
If you are properly advised on the legal state of health of your business you can enter negotiations armed with the knowledge needed to maximise your sale value. You can anticipate the questions or issues that will be raised and be working towards the resolution of these issues to avoid the sale process being stalled.
As specialist commercial and business lawyers and solicitors in Dublin we can review your business for the purposes of sale and advise on how to ensure a smooth transfer process. We can identify any issues at the outset which may need to be addressed or dealt with or to consider as part of the commercial transaction. A properly advised and prepared Vendor will be in a position to agree a purchase price in the knowledge of issues which purchasers can sometimes raise with a view to negotiating a reduced purchase price.
If you are considering the sale of your business you should contact us for no obligation consultation to discuss the sale so that the negotiations can be concluded on a fully informed basis and you are armed with the knowledge required to maximise the sale value of your business.