Ready...Steady... Sell! - GBH Law
It’s never too early to get ready to sell your business, even if you are only just starting out. In our experience, the more organised you are, the smoother a sale process will be.
All company and business sales start with a due diligence process, which is a chance for a potential buyer to take a look under the bonnet and push the buttons to make sure everything is as they expect. Any offer letter or heads of terms is likely to be subject to completion of due diligence and you can expect to receive a detailed list of questions that your buyer will expect you to respond to fully. Typically, all the relevant information you provide is uploaded to an electronic “data room” (essentially an online filing cabinet) for the buyer to review and then ask any further questions.
There are a number of things you can do now to make sure that a due diligence process runs smoothly, with no nasty surprises for your potential buyer:
- Make sure that your Companies House filings are up to date and accurate- your solicitor or accountant should be able to help you check that everything looks to be filed properly. You should also make sure that any old charges have been marked as “satisfied” at Companies House.
- Find your statutory books (these should contain a shareholder/ members register and, for a company, a register of directors as a minimum) and make sure that they are up to date. These should have been put together on incorporation of your company and it is important to make sure that the shareholder register is always kept up to date as it shows who the legal owner of the shares is.
- Keep your share certificates somewhere safe, a buyer will want these on completion of a company sale.
- If you hold regular board meetings or members meetings check that the minutes are all written up and signed and that you have electronic copies of them.
- Check that the copies of contracts you hold with key customers and suppliers are all signed and dated, and that you have electronic copies saved in an organised way, with a sensible title! This will make it much easier to upload key contracts to an electronic data room.
- Make sure that all of your employees, consultants and contractors have signed contracts or service agreements and that you have electronic copies which are fully signed and dated.
- Check that your policies and procedures are up to date. Have you reviewed your data protection policies recently? Do your terms and conditions need to be updated following Brexit? Do your HR policies need to be updated to reflect increased remote working?
Don’t forget to make sure that your potential buyer has signed a confidentiality agreement (sometimes referred to as a non-disclosure agreement or NDA) before providing any sensitive information to them.
Look out for our next post to learn more about the sales process and the key points to consider when negotiating terms with your potential buyer.