Unless you have aspirations to be a serial entrepreneur, selling your company is usually a once in a lifetime experience which can be quite intimidating unless you understand how the process usually works.
The stages in a purchase or a sale are fairly standard and, irrespective of the size of the deal, follow a similar pattern each time.
Prepare your business for sale
Ideally you will have been working towards a successful exit for years before you do actually decide to sell, as this will ensure you achieve the highest eventual valuation. Speak to us about our exit planning tools so you can focus on this as soon as possible.
Advertise the business for sale
Whilst you can sometimes be approached by a potential purchaser, if you want to remain in control of this process, you will also want to encourage other competitive offers. You can’t attract this interest unless you promote that your business is for sale, but to maintain confidentiality in the earliest stages, we would advise that we first send an anonymous flyer to the parties we consider to be the most likely potential purchasers. Those who are interested to investigate this opportunity will be asked to sign a confidentiality letter or non-disclosure agreement, after which we will share your business’ name and then distribute more detailed information to them.
Open discussions with a view to reaching Heads of Terms
After sharing some information about your business, potential purchasers usually have some questions which they want to ask you in person and discuss the company in greater depth. We can attend these meetings to support you and they may also be accompanied by their corporate finance adviser or lawyer to these meetings. When we have narrowed down the most likely buyers, we will ask them to make an offer which contains the terms of the deal. When we have agreed which deal is most preferred, the potential purchaser will most likely ask for a period of exclusivity where we are not able to continue discussions with other parties, to allow them time to conduct their due diligence.
Instruct lawyers to prepare documentation
When terms have been agreed then lawyers can be instructed to formalise the deal in the legal contracts. This is where warranties & indemnities are also discussed and agreed, where you provide some comfort for the purchaser, but your own exposure is also limited to the risk you are prepared to take. Other documents to be agreed may include ongoing consultancy or service agreements and property conveyancing or leases. Alongside these continuing negotiations, the purchaser will often be arranging their own funding if they require external finance in order to complete the deal, so many parties can become involved at this stage.
Immediately before completion, often only days or even hours before, the purchaser’s lawyers will require some documents to verify the latest position and any items included in the warranties or indemnities. When the day of completion arrives, there are a multitude of documents to be signed, often electronically, and the lawyers will agree upon the timetable of how to manage this process. Following completion, there may be further work required by the parties’ accountants, for example there may be a requirement to prepare completion accounts to finalise what the eventual financial position of the company was on the day of the deal.
Managing this process can become quite time-consuming so we advise that you allow us to lead the transaction, allowing you to continue running your business effectively until the day that the deal is completed.