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The Legal Checklist for Selling Your Business
If you plan on selling your business, you'll need to consider more than what your lowest selling price might be. A lot goes into preparing a business for the market, which is why working with an experienced broker is often a good idea. He or she can help you get an accurate value for the business, market the company to the most possible buyers and negotiate a sale that works in your favour.
But brokers aren't the only people you might consult when selling a company. It's a good idea to get a legal professional involved, especially before you sign anything contractual. Here's a quick checklist of legal matters you might want to work with a solicitor on before you sell.
- Ensure the manner by which you plan to sell the company minimises any tax or fee implications.
- Ensure that all agreements and obligations are up-to-date; most experts recommend spending a year or more keeping updated on all agreements before placing your business on the market. This helps increase the value of the business and keeps surprise problems from coming up during the transaction.
- Go through all licenses and permits required for your business. Expired licenses can be a problem when you try to sell your company, but you also want to ensure that all current licenses or permits can actually be renewed under a separate owner.
- Double check that any Government requirements are handled. One of the fastest ways to scare off buyers is to have an expensive regulatory requirement hanging over the business; even buyers who are willing to purchase anyway may want a steep discount on the sale price to make up for known future expenses.
- Work with an accountant to ensure a full audit of your books is completed. You'll need this information for any valuation, and sellers are more likely to purchase a company when they can fully determine the state of financials. An audit also lets you know where any issues might reside in case you need to fix problems before you put your company on the market.
- Work with your broker and solicitor to ensure the sales agreement is comprehensive. Some things that should be included in the sales agreement include:
- The purchase price
- The time period for due diligence (this is the time the buyer has to investigate the business before making a final decision on the purchase)
- Any conditions of the purchase (such as approval from the Landlord or Franchise)
- Review the final sales agreement closely to ensure it doesn't have unnecessary restrictions on trade for yourself. It's common to restrict the seller from competing specifically with the buyer in the future, but you don't want to give up all your rights to conduct business.
- Check the Personal Property Securities Register. If any property involved in the sale is listed, you'll need to remove security by seeking appropriate discharge before the sale is finalised.
This checklist includes some common legal matters any business owner should consider when selling. It's not comprehensive, and every transaction is unique. By working with experienced brokers and other professionals, you can protect your interests while seeking the best possible sales price for your company.
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