Area focus: St. Albans

1. Appoint your professional team

It is important that you and the buyer each appoint a team of experienced and trusted professional advisers immediately.

Your IFA, accountant, tax adviser and solicitor will need to be consulted on all major decisions and will need to work with the buyer’s team to meet an urgent timetable.

An expedited sale process will likely take up all of your time so you will need others to run the business in the interim.

2. Conduct a financial health check

You will need to conduct an urgent financial review of the business to identify any major issues that may need to be addressed to avoid causing concern to a buyer and potentially derailing the sale.

Also check the business ownership arrangements to ensure a smooth ownership transition.

Expect the unexpected

In an ideal scenario, planning should be started many months in advance to prepare your business for sale. Life is not that simple and it may be necessary to move much more quickly, in particular as a result of impending tax changes, health issues or legal disputes.

Senior Associate in Company and Commercial Law, Simon Porter, sets out his top tips to consider when selling a business.

3. Find the right buyer

It may be that your particular situation means that you have no choice of buyer. However, if you do have a choice, examples of buyers include a trade/strategic buyer (someone who has a similar business and, by buying your business, will be able to move their business to the next stage), a financial buyer (a professional investor who is buying with a view to making a profit and may require you to continue to run the business for a period after sale) or an operational buyer (a person running an established and successful business – perhaps senior employees in your own business – who want to be their own boss and earn a decent income).

Your professional team may be able to help you to find or vet a suitable buyer.

4. Structure the right deal

Your professional team will advise you at the outset how to structure the best deal which will need to be agreed with the buyer. One question is whether to proceed by way of an asset sale or a share sale.

In an asset sale, you sell only those assets you want to sell (or the buyer wants to buy) and you are left to deal with the liabilities that are left behind.

Going down the share sale route allows you to sell your business as a whole including all assets and liabilities. There are also many different types of sale consideration, such as cash, deferred consideration, shares in the buying company and loan notes.

There are distinct tax advantages and disadvantages to these structures so it is critical that advice is taken from your team before making a final decision.

5. Understand the process

Selling your business, particularly in a short space of time, will be a very time consuming and stressful experience. It is largely a buyer-driven process and this can be managed with the support of your professional team.

Having a lead negotiator by your side from the start will help to manage relationships with the buyer and its advisers.