The selling process
No two businesses are the same, and each business sale presents different challenges – however, we have outlined below the main steps that are typical of the business selling process:
- The seller decides to consider the sale of their business, and meets with all advisors to gather the necessary advice and information.
- Upon appointing a specialist broker, the client needs to decide whether to proceed immediately or embark on a period of “business grooming” i.e. implementing a number of improvements/ measures to make the business more attractive to a third party.
- Once the seller is at ease with their decision and the timing of the sale has been agreed, a Confirmation of Terms is signed in order to retain the broker to market the business.
- The sale preparation process starts, and the seller gathers together all of the necessary documentation (accounts, asset lists etc).
- The broker prepares a marketing pack for the business and agrees a shortlist of potential buyers with the seller.
- Marketing packs are only sent out to prospective buyers once a confidentiality agreement has been signed and received by the broker.
- The broker manages all potential buyer’s responses, arranging meetings with the seller (where appropriate).
- All indicative offers are then submitted to the seller for consideration, before a decision is made by the seller – taking into account the proposition, suitability and reliability of each prospective buyer. Further negotiation may well be necessary before agreement.
- The Heads of Terms are agreed in principle, with a formal agreement drafted by buyer and/or sellers’ solicitors and signed by both parties.
- The Due Diligence process takes place, whereby the seller discloses to the buyer all relevant documentation and information about their business.
- Once both legal representatives are agreed on the final draft of the sale agreement* contracts can be duly exchanged and a completion date agreed.
- It is usual but not always essential that both buyer and seller attend a completion meeting where final documents are signed and funds are transferred.
*Sale agreements are either in the form of an SPA (Share purchase agreement) when a company is sold, or an APA (Asset purchase agreement) when for example, a rental portfolio is sold.
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