Buying or selling your business could be one of the most important things you ever do. Whatever your reasons, it could be a life-changing decision.
It can be a stressful and anxious time. A trusted solicitor is there to take the weight off your shoulders in this process, by providing diligent and efficient paperwork, good communication and expert advice. At Ison Harrison, our specialist team deal with all of the legal aspects involved in buying or selling including:
- due diligence,
- contract negotiations
- advising upon warranties and indemnities
- preparing and advising upon loan documentation (as well as security)
- the transfer of shares or the business’ assets.
Before the legal work starts, there are a multitude of considerations and we discuss some of those here.
Advice for buying a business
When buying a business you need to weigh up what kind of business you want. This depends on the kind of challenge you want. Do you want a fledgling business to build up from scratch? Or do you want an existing and established business where you will hit the ground running? There are other factors to consider in this process also:
Market: You need to assess the market of the business you want to buy. Is there potential for growth? Will it provide for you and your family for many years?
Value: Do you know how to value the business you are looking to buy and ensure you are getting a fair deal? Different people have different ways of valuing a business, so you need to understand how they have arrived at a figure. You also need to consider other factors that could affect a valuation, such as why is this person selling? Is it because the business is performing badly? Is it the location? Is it the market conditions? All these factors could make a business less attractive and potentially a lot cheaper;
Industry: You need to understand the industry and the controlling regulations and standards within it, as this could make the business more of a challenge;
Staff: You will have obligations to the existing staff of a business, so you may be inheriting problems or resistance to change. Bear this in mind and also be aware of employment law, HR practices and your key responsibilities;
Plan: Most importantly, have a structured plan for how you want to grow the business year-on-year, with realistic and achievable goals.
Advice for selling a business
Selling a business can be relatively simple or very complex, depending on the size of the business and your related responsibilities and obligations with regards tax, capital gains, partnerships, share transfers and staff. There is lots to consider and sometimes the planning and the process of selling a business can start 12-18 months before the transaction eventually takes place.
Preparation: Like selling a house, get the business in good shape to make it attractive for sale, i.e. get paperwork, accounts, customer base and properties in order;
Value: Obtain an accurate and fair valuation and understand how it has been arrived at to help you in negotiations, because you will be asked;
Process: Understand how due diligence works and be wary that confidentiality will probably be needed so as not to alert existing staff or competitors to your plans at an early stage;
The deal: Make sure the deal is structured and financed to suit you. This is what you will be left with and it has to be able to set you up for the next stage of your life.