What are the steps in a sale of business?

1. Preliminary negotiations, pre-exchange searches, negotiation of special conditions, agreements signed.
2. Exchange of contracts takes place at the offices of the vendor’s solicitors, where a deposit of 10% of the purchase price is usually paid. Contracts are now legally binding.
3. The purchaser’s solicitor sends to the vendor’s solicitor “requisitions on title”, which are a list of questions sent to the vendor’s solicitor. If the answers turn out to be false or misleading, these will provide protection to the purchaser.
4. After exchange, the vendor will generally have a number of obligations to fulfil, as stated in the contract for sale. These include: executing the necessary documents to transfer title, discharging a mortgage and acquiring a lessor’s consent to a transfer of lease.
5. The contract for sale will state a completion date, when settlement will occur. Settlement generally occurs at a place nominated by the vendor. The solicitors for the buyer and the seller must have all the relevant documents signed and the appropriate cheques drawn.

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