They
want to know what the problems are, if any.Leonard Kasler & Company
Preparing Your Business for Sale
(20 Things to Know)
The moral of this story comes at the beginning, rather than at the end. "Talk to us sooner rather than later". Some of the best sales are achieved after months, or even years’ preparation.
1. Confidentiality. Obtain a Confidentiality Agreement before letting the purchaser see the way you operate, your figures and secrets
2. Structure. Should you sell your shares in the Company or have the Company sell its assets? We can advise.
3. Tax. We might be able to structure the transaction so that no tax is payable –using retirement or roll over relief, or arranging that "always intended" emigration before sale.
4. Handover. The Purchaser may wish you to stay on to oversee a smooth transition of control to his people. If you want to get away, consider how your key Staff can be empowered to assume this role
5. Disclosure. Purchasers wish to be
reassured that there are no "skeletons in the cupboard".
They
want to know what the problems are, if any.
6. Warranties. If you refuse to give warranties, you will raise suspicions that you have something to hide.
7. Insurance. Review your cover. Consider the possibility of insuring yourself against inadvertent misrepresentation.
8. Property. The Purchaser will investigate title and find out all he can about your premises. Keep a file for all paperwork. Know where the deeds are.
9. Key Staff. In return for pay rises, get them to agree a modern Employment Contract.
10. Employees generally. Document all your Staff’s employment terms.
11. Licences. Your business may depend on a Licence to use a process or name or authorisation from governmental statutory or local authority. Check the formal requirements for assignment.
12. Contracts. All businesses have on-going contracts. There may be contracts with Suppliers, Customers, Distributors, Franchisees, Licensees, Tenants, Equipment Lessors, Cleaning and Maintenance firms, Consultants. Check that all relationships are documented.
13. Intellectual Property.
There may be plans, drawings, graphics, art,
models, designs, patents, trade marks. List them and document them. Check the formal
requirements for assignment.
14. Litigation. Consider whether to attempt settlement. Purchasers hate uncertainty or will use it to reduce the price. Consider the potential for adverse press comment.
15. Revenue. Consider the quality of your income. The Purchaser will be trying to decide whether he can maintain it.
16. Expenditure. The Purchaser will also be looking to see whether your expenditure can be reduced and yet still maintain revenue growth. Do that job yourself!
17. Documentation. Your dealings with the Purchaser will be verbal. His lawyers will want documentary evidence. Start now.
18. Timetable. Prepare properly, then you can confidently agree a tight timetable. Demand that the purchaser perform.
19. Discipline. Consider your present practices in the light of the expectations of a potential Purchaser. Improve your administration and record keeping in anticipation.
20. We would be happy to become more involved with your business and to render advice on your systems from a legal point of view.
Michael Breeze
Leoanrd Kasler & Company
Sunday, 13. October 2002