Selling a Business
More often than not business owners expect a sale to be completed within a number of days after a buyer has given the verbal “Go-ahead” and the terms of the sale have been negotiated.
Often a seller engages a commercial agent to act on his/her behalf, much the same way as a seller engages an agent to sell his/her house and preparations must be made well in advance to ensure the smooth processes which are required.There are many things you can do to make the task more pleasant for yourself as well as the buyer and also your lawyers. This preparation may also reduce your legal costs.
Here are some suggestions for you:
- You must not exaggerate or misrepresent the performance of your business or your client base in whatever form of advertising you choose, or in the negotiation process, or in copies of the documentation provided to prospective buyers. If you do that and the buyer fails in the business, there is a good chance you will be sued for compensation by the buyer for the misrepresentation.
- Do you have the original contract from when you purchased the business? If so, it may have some useful information about what was bought by you and by whom?
- You need to ensure that your accounting records are up to date, if not, check with your accountant to ensure that they are at the time you initiate the sale process. A buyer has the right to ask you for copies of profit and loss statements for their accountant to check to ensure that what they are buying is a good sound business.
- Do you have an up to date list of equipment and the cost value of these pieces? It may be that your accountant has that information for depreciation purposes. In a sale of business agreement, there is normally a schedule attached listing this equipment.
- Do you have employees? If so, a schedule is required to be provided to a prospective buyer confirming who the employees are, their terms of employment (full-time; part-time or casual) and their wages and leave entitlements.
There are many things to consider and the above by no means covers it all – hence, it is important that you seek informative and expert legal advice.