3 Steps to Buying and Selling a Business Successfully
Whether you’re thinking of buying or selling a business it will be a significant financial and emotional decision requiring proper steps and processes to be followed. You will want the transaction to go smoothly and not to be caught out by unexpected surprises.
If you’re planning on buying or selling a business soon, read the following three tips from our commercial law experts that will help you.
1. Do your due diligence
You may already be familiar with the words “due diligence”. It is the exercise purchasers usually follow as a condition of the contract to satisfy themselves with the detail of what is being purchased. As the exercise usually involves both time and sometimes significant cost the purpose of the condition is to enable the purchase that conduct the investigation with the comfort of a binding contract if the condition is satisfied.
As a buyer, at the outset you need to put together a strong team around you – including an accountant, lawyer and financing specialist (bank or broker). you’re about to invest in something that will potentially become a significant source of income and brings with it significant responsibilities. so it’s essential that you know exactly what you’re getting into. This includes obtaining and considering as much relevant information about a business as you can including key assets, liabilities, suppliers, customers, material contracts and leases. You will also need to familiarise yourself with the value being attributed to comparable businesses in the locality and existing and possible future competition. All the more so if this is the first time you have been in business.
If you intend to sell, properly preparing your business for sale will become the foundation of your entire transaction. You can expect your purchaser to carry out a robust due diligence programme. Begin by identifying anything that needs correcting within your business. Make sure that all your information and records are available and ready to withstand scrutiny.
2. Protect yourself
Purchase agreements are customarily prepared by the purchaser’s solicitor. There are a range of matters which need to be incorporated, many of which will not have occurred to you. For example, you will need to be aware of what warranties should be sought from the vendor for example turnover are customary. You will need to discuss with your solicitor to include reasonable vendor assistance and restraint of trade periods in the agreement.
A well drafted agreement can expedite the contract completion phase and provide you with the protections you need should anything go wrong down the track.
When selling, you will wish to make sure the document prepared by the purchaser’s solicitor does not include unusual or unreasonable provisions, you will want to make sure how the confidentiality provision and other standard provisions covers matters such as lessor consent.
There are many legal and financial matters that you’ll need to wrap your head around. You will be dealing with sensitive information within documents, contracts, agreements, and more on which you are likely to need professional advice. Whether you’re buying or selling our commercial lawyers will work with you and your accountant to achieve a successful transaction for you.
Buying or Selling a Business? Gillespie Young Watson Provides Specialised Legal Advice
The experienced commercial law team here at Gillespie Young Watson can work with you and your other advisors, allowing you to carry on your business with confidence and assurance that the legal side of your business transaction is in order.
If you’re looking for professional legal advice, contact our team or simply ring 0800 GYWLAW today.