Make your business a more desirable asset to prospective buyers

What steps can you take to make your business a more desirable asset to prospective buyers to ensure that you get the best possible price? 

As part of the transactional process, a potential buyer will conduct an extensive investigation of your business. This process is called due diligence.

To try to ensure that you receive, and retain, the optimum purchase price it is crucial to have all the relevant information at hand and up to date.

Rebecca Robinson, director in the Company Commercial team at Wake Smith Solicitors looks at what a business owner can do in preparation of a sale. 

This article covers:

• Pre-transactional steps
• Locating documents
• Removing charges
• Key contracts
• Employment contracts
• Business assets
• Check insurance policies
• Up to date documents
• Compliance
• Dispute resolution
• Your next move?

Pre-transactional steps

The sale of your business is usually time intensive, therefore, taking as many possible pre-transaction steps will help you, and save time, in the long run.

This is especially true if you are generally trying to juggle your day to day operational responsibilities whilst providing a buyer with due diligence information and negotiating the transactional documents.

A buyer wants to see that a business is properly managed and being organised should assist you in any price negotiations.

Locating documents

Locate any documents evidencing ownership of shares or assets, such as your Company’s statutory books or property deeds and ensure they are up to date.

Ensure that copies of your annual accounts, management accounts, facility agreements, security documents, lists of key suppliers & customers, schedules of creditors & debtors, employment contracts and pensions arrangements, insurance policies and licences are to hand or accessible.

Removing charges

Remove any redundant charges registered at Companies House and Land Registry.

Key contracts

Obtain copies of key contracts with suppliers or customers and consider documenting any informal relationships.

Employment contracts

Check that your employment contracts are up to date and that you have complied with any employment related requirements (e.g. Pension Auto-Enrolment).

Business assets

Service/repair the business’ assets to maximise their value and keep copies of any inspection/maintenance documents.

Check insurance policies

Ensure that any insurance is adequate. Speak to a broker if you are unsure about this.

Up to date documents

Check that licences, consents and registrations are up to date and diarise any that need to be renewed during the transaction process.

Compliance

Check that any compliance issues (e.g. health and safety records and data protection registration) are up to date.

Dispute resolution

Try to resolve any disputes with employees, customers or suppliers.

Your next move?

For further information on selling your business please contact Rebecca Robinson at Wake Smith Solicitors on 0114 224 2007 or email [email protected]

Find out more about our Company Commercial services

Posted 12/12/23