After a number of years business development and profit making or markets regeneration and market growth you can consider selling your business or Company. As you would have seen from our sections on purchasing business or companies a number of questions would be asked by way of proper legal due diligence which would need to be addressed as part of the sale process.
Typically a Company will face scrutiny in relation to its legal documentation and following a sample list of checks and balances which may place a Company in a healthier legal position for the purposes of sale:-
- All premises from which the company operates should be occupied on foot of a written lease or licence, especially where that premises is owned by the principals of the company. You should collect the leases and/or title documents as these will be required.
- Commonly questions are asked about planning permissions and fire safety compliance in respect of premises from which he company operates. If any works have been undertaken in redevelopment or fitouts by the company, you should be advised by a planning expert in advance of any sale of potential planning or fire safety issues that might hinder the sale of the company or affect the full sale value so that these points can be negotiated around in the discussions for sale.
- By law every employee should have an employment contract. The employment contract should be properly constituted incorporating (or making reference to) a disciplinary process. The employment contracts should be collected and copied.
- A Company should appraise itself of the environmental & waste disposal and packaging regulations that apply to it.
- If intellectual property e.g. trade marks, designs patents or domain names are in the personal names of Directors these would need to either properly licensed to the Company (typically these would have to be irrevocable licenses) or indeed transferred to the Company as part of the sale process. If you are selling a business you should be advised as to the tax implications of transfer of these assets into the Company.
- The Company’s property insurance, public liability and employers liability insurance and (if in the business of retail sales of products) product liability insurances should all be up to date and copies of policies should be available to present to the Purchaser as part of the legal due diligence.
- You should approach your Accountant as to whether operating cash flow is to be left in the business as part of the sale or extracted. This is commonly a commercial term that is agreed between you and the purchaser the amount left in the Company is dictated by the most tax efficient model.
- You should ensure that all bank mandates for the operation of the company’s accounts are properly organised as these will need to be transferred as part of the process of sale which means they will need to be executed by the existing mandate holders to authorise transfer to the nominated parties of the company purchaser.
The above is a brief checklist of typical issues that can be encountered in the sale of your Company. We can advise on how to ensure a smooth transfer process and identify any issues at the outset which may need to be addressed or dealt with or consider this part of the commercial transaction. A properly advised and prepared Vendor will be in a position to agree a purchase price with confidence and be assured that issues will not arise in the sale of his or her business that may affect the commercial terms otherwise agreed.
If you are considering the sale of your business you should schedule a meeting with us to sit down for no obligation consultation to discuss the legal health of your Company. If you wish to schedule an appointment or even just meet us for a cup of coffee please feel free to contact us.