Sellers should be aware that preparation required for a business sale, post COVID-19, may look different to what has been the norm over recent years. Nonetheless, our corporate team have extensive experience in advising business owners in all aspects of the sale of a business from preparation all the way through to completion.

Firstly, you will need to clarify how you wish to sell your business.

Sale of Shares or Sale of Assets?

If you are selling a limited company, there are two types of sale:

  • Sale of Shares – If you sell the shares of the Company, you are essentially selling it as a whole. All existing contracts will continue (unless they include change of control clauses) and the business will continue to run more or less the same just under new ownership.
  • Sale of Assets – This entails selling certain assets (both tangible and intangible assets) of the company together with any liabilities that the buyer agrees to take on.

Please note, the tax implications for the two types of sale differ and you will need to discuss this with an accountant/tax advisor. This will assist in making a decision on how to structure the sale.

Generally it is more tax efficient for a seller to sell the shares in the Company rather than the assets. However buyers will often prefer to buy the assets of a business in order to avoid taking on the pre-existing liability of the companies. This will be particularly relevant post Covid-19 where businesses may have taken out CBILS loans or Bounce Back Loans.

If you are selling as a sole trader or as a partnership the sale will be an asset sale.


Now you have clarified how you are selling the business the next step is preparation. Buyers are likely to be more cautious about purchasing a business after Covid-19 but there will also be buyers who are looking to snap up distressed businesses for lower sums that would normally be paid.

We have outlined below the key steps to prepare your business for sale:

Prepare a Business Summary

The summary should cover an overview of the business and help to answer key questions you can expect from buyers. In a post COVID-19 world, it would be useful to cover the following:

  • What steps were taken to manage cash flow during the pandemic;
  • How the business performed during COVID-19 shut-downs and delays;
  • Did COVID-19 impact the business’ historical earnings and near-term forecast?
  • Whether you think the reaction to COVID-19 will create any structural changes in your industry.


Prospective buyers will want to know the financial impact of COVID-19 on the business so they can properly value it. Ensure that all financial information for the business is up to date and accurate.

In quantifying the historical finances of the business, it would be useful to include the following (if applicable):

  • Details of any lost/delayed sales and margin with an explanation as to how this has or will be recovered in future.
  • Details of supplier interruptions/cost of alternative suppliers/cost of expediting materials
  • Impact of redundancies/furloughs
  • Business interruption insurance claims
  • Details of Government loans received
  • One-time costs associated with the disruption of the business, such as idle facility costs, costs to set up remote workforce, severance, etc.

It will also be useful to prepare a financial forecast to map out how you think the business will perform in the future. This is perhaps the most important consideration for a buyer.

Business Premises

For many businesses, the Coronavirus pandemic has shown that many business can function remotely without interruption. As a consequence, businesses who are not tied into long term leases with large fixed overheads may well be more attractive to discerning buyers who may have ideas about the future digitalisation of a business and the avoidance of high property related costs.

If a business is coming to an end of a long term lease and can demonstrate that a business could effectively operate from a smaller premises or even without a formal premises that will be a large saving for a buyer which will make a business more attractive.

Of course, this doesn’t apply to every business. For some business, there physical location is central to the operation of the business. If this is the case then having clear terms on a lease with protection for the tenant under the Landlord and Tenant Act 1954 is more attractive.

Resolve any employment related matters

Are all employees back from furlough?
Have any employees been made redundancy/going through the redundancy progress?
Are there any disputes with any employees?

Resolving the above will reduce liabilities on prospective buyers and therefore make the business more appealing. Buyers may well want a seller to have resolved all redundancy related matters before buying and are likely to require a seller to give an indemnity in respect of any breach of employment law concerning the redundancy process.

Long term contracts

Where possible, it would be useful to get clients signed up to long-term contracts. This will make the business more attractive to purchase as it can guarantee revenue.

Due Diligence documents

Preparing the due diligence documents required as part of the sale process is usually a lengthy task, so starting early is always useful.

Buyers will expect that all the relevant documents to be properly organised/documented. You will need to collect together incorporation papers, corporate governance documents, permits, licensing agreements, employee contracts, and property leases etc.

Remove reliance on the business owner

A business that relies heavily on its owner is not as valuable as a business that is not reliant on its owner. Many business owners don’t understand how reducing or minimising the risks of key person reliance can significantly improve the value of their business.

Some examples of how to remove reliance are:

  • Management succession – Invest in professional development of key staff.
  • Client relationship management – establish client relationship protocols so staff can manage client relationships as oppose to the business owner.

Whatever your needs or queries, we are here to help. To discuss selling your business, please contact us to discuss on 0113 284 5000.

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