Thinking of selling your business? Here at SO Legal we take care of lots of clients who are selling their business, and we appreciate that the sale is often the final step at the end of a long journey. With this in mind, our aim is to make the sale of your business as smooth and straightforward as possible.
While all business sales are unique, there are a number of questions clients tend to ask. So, if you’re thinking of selling your business, chances are you’ve pondered the following FAQs.
Can I carry on running the business as normal until the sale completes?
Provided that you haven’t signed an agreement to the contrary, you can carry on your business as normal until the sale completes. However, it is certainly worth considering the implications of entering into any long-term commitments during this time, and how these decisions may affect the buyer’s feelings about the business. Contracts usually require you to run the business as usual between exchange and completion. That being said, financial or other commitments that secure future revenue for the business are of course likely to make it an even more attractive sale prospect if you continue to make the business a success in this period.
How long will the sale take?
Once your business is prepared for sale and you have a buyer in place, the sale should take around 4-8 weeks. We say ‘should’ because, as mentioned above, each business sale is unique and has different factors to take into consideration. Of course, here at SO Legal we will do everything we can to make sure the process moves at your desired pace.
Typically, the most time-consuming element of your business sale will be negotiating. Negotiations on the contract and the transfer of the lease (in an asset sale) as well as due diligence take up the most time because each party needs to verify the commercial and financial information provided by the other. In addition, the buyer’s solicitors need to ask questions to make sure, for example, that the business owns everything the owner says it does and there are no hidden liabilities or disputes. The property aspects may also take some time as searches need to be ordered and the consent of the landlord obtained.
What guarantees will I have to give?
In almost all instances, the buyer will ask for an extensive list of guarantees or assurances about the business. These are known as ‘warranties’. Warranties are in essence representations or confirmations made to the buyer that a certain position will exist in respect of the business. Such as ‘the business has no litigation pending or against it.’ The warranties can cover commercial matters, property issues, financial and legal information and you will be required to ‘warrant’ that all the information you have supplied about the business is true (although this is part of the contractual negotiation as to the nature of true, accurate and what is disclosed or deemed disclosed against that). This can often take the most amount of time in negotiations and a good solicitor will be able to highlight what should and shouldn’t be agreed.
Warranties and indemnities are dealt with in the negotiation phase of the sale and are about striking a balance between the interest of both parties.
What happens on completion?
Most importantly, you’ll receive your money! This will be in accordance with the sale agreement you will have already signed. In addition, completion is the transfer of the control of the business and assets to the buyer. If you’re not staying on as a director or employee, your resignation will usually take effect from this date too.
These are just a few of the many questions we get asked by clients considering a business sale, and we’re always happy to answer them. If you’re thinking about selling your business and have any questions or would like to discuss your potential business sale (or purchase), please Contact us at firstname.lastname@example.org or on 01323 40755
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