The decision to sell your business is a significant step, so it’s important you’re prepared and understand the process.
This article, the first in our ‘Maximising business value’ series, provides an overview of the key stages when selling your business.
1) Prepare your business for sale: you may wish to undertake some pre-sale planning or vendor due diligence to help maximise the value of the business and reduce the risk of issues which could erode value during the process.
2) Prepare an information memorandum: this is a sales document which will provide a potential buyer with information on your business, and will be issued once the potential buyer has signed a non-disclosure agreement (“NDA”) after reviewing an anonymised high level teaser of the business.
3) Meet with interested potential buyers: during this phase, you will present further information on the business and answer questions in order to help a potential buyer make a decision on an indicative offer.
4) Agree ‘heads of terms’: once you have received indicative non-binding offers from interested parties, you will decide on which offer to accept and you will go into exclusivity with one party.
5) Provide information for financial, tax, commercial and legal due diligence: during this phase, the potential buyer will request extensive information in order to understand the business in detail and identify any issues that may affect value.
6) Agree ‘sale and purchase agreement’ and other legal documentation: you will negotiate the terms of the deal and any other legal documentation.
7) Completion of the deal: once all the documentation is ready, it will be signed and exchanged. Typically this date will also be the agreed completion date.
There are number of stages in the process of selling your business. Preparation is key to helping improve the value of your business and reducing the risk of issues arising during the sales process.
Our next article will discuss different methods of valuing your business.
If you would like any further information on selling your business, including valuations please contact
[email protected]