People sell businesses for various reasons. You may want to move into a different industry and try out something new. Alternatively, you may be on the verge of retirement and your children may not be interested in taking on your business. Whatever the reason, it is vital to be wary of any legal issues when selling a business.
The most crucial aspect is to be prepared. A buyer will want to go through a process of due diligence. This means that you must give them the information they need while they are considering purchasing your business (this should include details such as payroll, customer records and a detailed list of any assets owned by the company.) If you hide any information or mislead them then this can lead to legal claims in the future and it is best to avoid this where possible.
Equally, it is worth having an agreement in place with the buyer. For example you may wish to receive a statement of intent, preferably with a non-disclosure agreement or a confidentiality clause. While you want to give them the relevant legal information involved with making a purchase it is important to avoid giving away too much, especially if the deal collapses at a later point.
Once a price for the company has agreed and both parties are satisfied the representative of the buyer should write a purchase agreement. This is a formal agreement and ought to cover all of the warranties, indemnities and asset allocations involved with the purchase of the company. In theory this should then clarify what the purchaser expects to buy from the seller as well as the legal responsibilities that the purchaser takes on when they purchase the company.
This is why relevant legal advice is so important- while companies may have legal departments they may not necessarily have the specific experience involved with the selling process. You have to be sure that the people handling your sale give you the right advice and avoid any complications as much as possible so that you do not face any difficulties after the purchase has been completed (not to mention these could harm your business prospects if you move on to another sector if people feel you did not sell your previous business in an ethical way).
The best legal advisors will also check to ensure that the people buying your company are doing so in the right way and can back up any claims they make. You want to be sure that they stick with any agreed price and uphold any promises they make and that any agreements they make are legally binding. All of this requires effective legal experience and often this can come purely through being involved in a lot of business sales and being aware of the potential complications that can occur during the buying and selling process.
If you want to know more about how Larcomes can support your businesses contact us today to see how we can help guide you through the selling of your business.