Selling your business - when to get advice and what information to provide?
Jan 15, 2020If you are planning on selling your business, and are being assisted by a solicitor, you will inevitably be asked for business documentation and history.
We regularly meet our clients once they have already accepted an offer on the business and are needing their contract prepared. More often than not, business owners are surprised by the volume of information that we require to prepare the Contract for Sale of Business, and exactly how much documentation that needs to be located, which may have, over time, ended up lost among masses of paperwork and old documents. This often include documents relating to business name registration, service agreements held by the business, business liabilities, intellectual property, PPSR registrations and employee information. In order to make the sale process easier and faster, we recommend that you begin getting this information together as soon as you decide to sell the business.
One of the most important aspects of selling a business is ensuring that all liability for the business is effectively assigned to the purchaser upon completion. For this reason (among many others!) it is important that you keep clear records of the different service and supply agreements, and any financed items that you may have for the business as you will need to determine:
- Whether the purchaser will agree to take on those agreements; and
- If they do not agree – whether you will be able to terminate the contract without penalties.
There may also be issues in relation to security interests held over property which has been included in the inventory of property for the business. If this is the case, you may need to seek releases from the interest holders before completion of the sale so that they are taken freely by the purchaser. If the business premises are leased you will also need to ensure that the fixtures and fittings you are including in the inventory belong to the business and not to the lessor.
Every business is different and we encourage you to seek legal advice as soon as you decide to sell so that you can determine what information you will need to provide once you have a purchaser. This can prevent lengthy delays, and help you ascertain the true value of your business before you accept an offer.
Contact the Shire Legal team if you have any questions.
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