Thinking about selling your business? Whether it’s the prospect of starting a new business or a new chapter in your life, selling doesn’t have to be stressful. We’ve compiled a list of five tips to help make the process as simple as possible.
1) Selling through a share sale
One way in which a business owner of a limited company can sell the company is through the sale of shares. As long as the shareholders agree to this decision, this can be an effective way of selling the business.
With the sale of shares, any liabilities or assets are also sold, along with the company itself. The buyer will carry out a due diligence questionnaire, which will help them better understand the protections they may need when making the purchase.
When a business is successfully purchased through the sale of a large number of shares, an SPA (Share purchase agreement) will be formed. It is worth researching this document further when committing to sell through shares, as doing so will help reduce any misunderstanding in the future.
Not sure which method is best to sell your business? Visit creslegal.com for impartial advice.
2) Selling via the sale of assets
Another way in which a business can be sold is through the sale of its assets. This can differ from a share sale, as assets can either be sold through a partial sale or a complete sale.
A partial sale occurs when some assets are sold, but not enough to prevent the business from conducting business. On the other hand, a complete sale occurs when all assets, as well as liabilities, are transferred to the new owner.
This sale of assets can include furniture, machinery, inventory, investments and more. As listed by Nibusinessinfo, it is important to remember factors such as asset depreciation and any tax implications that may occur when selling assets.
3) Liabilities
Loans, taxes and salaries are part and parcel of any business. These liabilities must be considered when selling a business. The buyer will want to have a clear image of where the company stands when it comes to liabilities, therefore these must be made explicitly clear during the sale of a business to avoid any legal complications.
4) Receiving independent advice
When considering whether to sell your business through shares or via the sale of assets, both methods have their pros and cons. Not only will you be selling the business, but you will also need to be preparing the business for sale.
By hiring an expert, much of the process is simplified for you. They will be able to provide advice on the legal facet of selling, as well as helping to produce the documents the buyer will want. Even better, hiring an expert may be advantageous when considering the tax implications of selling a business.
5) Create a business sales profile
Our last tip concerns how you market your sale. A great business sales profile will not be long, no more than a page or two, and will include factors such as the businesses’ potential for growth, the reason you are selling, and methods of contacting the seller.
According to Gov.uk, the total number of businesses in the UK at the end of March 2020 was estimated at 4,350,913. When selling your business, you need to make sure that you stand out!
What next?
Selling your business does not have to be a stressful process. Whether you’re looking to retire or have that next best business idea in mind, taking the time to understand the process of selling will help reduce any potential stress down the line. We wish you the best in your future endeavours!