Apr 25
Tips for preparing for a business sale
There are many reasons why business owners decide to sell and the drivers will vary. Whatever the reasons, the importance of preparing for a business sale is vital to deliver a successful outcome.
A business sale is an involved process that can take several months. A large portion of time and resource in the process is devoted to the due diligence exercise undertaken by the buyer. A buyer will want to verify the value of business and fully understand what it is buying and the extent of obligations and liabilities it will be assuming. Buyers will therefore raise extensive enquiries encompassing all areas of the business to satisfy themselves.
Preparing for a business sale by doing your own due diligence in advance can put you and your business in the best position possible. It can ultimately maximise the value you can achieve for your business and avoid price reductions or delays, as issues can be identified and rectified pre-sale. It can also help streamline the due diligence process ensuring the day-to-day management of the business is not neglected whilst the sale transaction progresses.
Tips for preparing for a business sale
The Corporate and Commercial team at Raworths has extensive experience of supporting business owners on successful business sales. Here are some tips on how to prepare for a business sale:
- Check your supplier and customer contracts, ensuring written contracts with appropriate duration and notice periods are in place and are signed by the parties. Review and update your standard terms and conditions and ensure they are incorporated into the contracts. Check for any unusual or onerous clauses or clauses that require consent or allow another party to terminate the contract on a sale of your business.
- Update company records, checking that statutory registers and Companies House filings are up-to-date.
- Identify key employees and consider a plan for their retention post-sale. Review your employment documentation, checking that employment contracts with appropriate restrictive covenants are in place and are signed by the employees, the employee handbook is up-to-date and any bonus or commissions schemes are documented. Take care with the terms of engagement of self-employed individuals and agents.
- Ensure property leases and licences are in place, and keep properties in a good state of repair.
- Consider other aspects of the business such as intellectual property (ensuring any rights are documented and registered as appropriate), data protection (including implementing GDPR compliant policies and procedures), ensure anti-bribery and corruption polices, health and safety policies and procedures are present along with any permits and consents necessary for the operation of the business.
- Engage trusted specialist advisers at an early stage to guide you through the sale process. Instructing legal advisers who have the required expertise at the outset can save you money, ensure you get the best price and terms on a deal and are protected in the event the transaction does not proceed.
How can Raworths help?
The Corporate and Commercial team at Raworths specialises in advising sellers and buyers in all legal aspects of business and company sales and purchases. Advice includes putting in place non-disclosure agreements, drafting and negotiating heads of terms, supporting the legal due diligence and disclosure process and preparing and dealing with negotiation of sale and purchase agreements.
We also work closely with colleagues in the Private Client team to make sure that succession planning and wealth management considerations are incorporated into the process to achieve successful outcomes for businesses, families and individuals.
To discuss this article, please contact Thaynara Charlesworth, Legal Director in the Corporate and Commercial team at Raworths based in Harrogate, North Yorkshire
Published on 3 April 2025
The information and any commentary contained in this briefing is for general information purposes only and does not constitute legal or any other type of professional advice.
