6 Things to consider when selling a business

Selling a business is a complex procedure where mistakes can be costly. It’s important, therefore, to give careful consideration to all stages of the process and to prepare the business as far in advance as possible.

So to help you meet your objectives and move on with the highest possible value achieved, here are six things to consider when selling your business.

1. Tax

It’s vital to understand the tax implications of selling your business so you don’t overpay. Capital Gains Tax (CGT) becomes due on the sale of a business and you may be liable for corporation tax if your business is a limited company. Capital Gains Tax may be offset by claiming Business Asset Disposal Relief if you’re eligible, however.

2. Business valuation

Obtaining an accurate and realistic valuation for your business is key to success. If the valuation isn’t reliable – it may be too high, for example – you’ll struggle to sell. If it’s undervalued, on the other hand, it means you’ll lose out on profits and won’t do justice to the hard work you’ve put in.

Selling My Business can offer you a business valuation that’s reliable and easy to access – please get in touch with one of the team to find out more.

3. Confidentiality

You don’t necessarily want your business sale to be public knowledge given that sensitive commercial information might fall into the hands of your competitors. You may also prefer to keep the sale confidential from your employees and other stakeholders to avert the possibility of someone trying to sabotage the process.

At Selling My Business, we ensure confidentiality by drafting a clear and comprehensive non-disclosure agreement (NDA) that can be sent to interested parties before any information is released.

4. Due diligence

Due diligence is a stage of the business sale where the prospective purchaser and their professional advisors scrutinise the information you’ve provided. This typically includes financial and legal, and information on the business’s assets, liabilities, and cash flow.

At this stage, the buyer is trying to establish whether the price they’re being asked to pay for your business is reasonable. It’s vital, therefore, to present clear and reliable facts, figures, and information that’s been gathered by your professional advisors.

5. Warranties and indemnities

Your purchaser will want to ensure they don’t suffer any unexpected financial losses if the business doesn’t perform as expected. They use warranties and indemnities for this purpose.

From your perspective, you’ll want to limit your future liability, which is why it’s crucial to obtain expert advice on the warranties and indemnities demanded by your buyer. Our team of experts can negotiate with the purchaser on your behalf to protect your interests and ensure that your future liability is minimised.

6. Who will sell your business?

Selling a business is potentially one of the most significant transactions you’ll undertake, so it makes sense to obtain professional guidance and support. Your professional advisors should include your accountant and solicitor, and it’s highly advisable to appoint business sales brokers with experience in your industry.

To find out more about business sales & acquisitions services from Practice Portfolio - please click here.