You’re preparing to sell your business, and you’re drawing up all the papers you need to make the transition as simple as can be. The financial statements are in order, and you’ve gone through the finer details of profits, losses and cashflow sheets meticulously. But what else?
As much as these financial details are important, any potential buyer will also want to see the other key documents you have to keep the business running smoothly. An organised set of contracts, agreements and any legislation that binds your business will be most useful when it comes to the selling process.
We’ve made it easy for you with a quick checklist of things to consider when compiling your papers for a sale.
About the business
Like a bit of a fact sheet, a document that outlines the history, current trading and commercial position, as well as the goals of the business will be most useful to an interested buyer. An honest overview will be appreciated, regardless of the buyer's own checks, as it summarises all that you’re bringing to the table in the sale, and portrays your intentions and offer in the best light. A few thoughts of your own for projections and ideas to develop sales may also be worth adding in, as it demonstrates potential for growth, thus making the business an attractive buy.
If you own a physical business, the legal contracts behind owning/leasing property, equipment, vehicles, etc. will need to be laid out on the table. Any terms and conditions you signed as the owner need to be agreed upon and transferred to the buyer as part of due diligence, and important dates for reassigning and renewals need to be made apparent. On top of managing leases made as part of sales agreements, you also need to ensure all health and safety policies are transferred to the new owner.
Continuity of staff is central to any business, and so are their rights. It is important to protect the rights of your employees during the sale of your company. To do this, you should ensure that all legal contracts are shifted in an organised and secure manner, with each individual’s employment details recorded meticulously so your buyer is aware of all the conditions of employment. Make note of pension payments, union agreements and any other schemes you may be a part of, and also disciplinary procedures that are specific to your company.
The buyer will be most interested in who you trade with, and so an overview of your clients will be most useful in the sales process. Showing that you have committed clients who’ve been with the company a long time, and evidence of long-term profit will make your business an attractive potential. A list of all contracts and recurring revenue streams is therefore key to your portfolio of documents.
Your suppliers are also vital. Details of the contractual collaborations you have, and the costs of the services need to be outlined to demonstrate the relationship and importance of their input to your buyer. Perhaps when compiling the list of suppliers and their relationship to the company, you can think about explaining each individual’s service and its specific importance to the company, to ensure that the buyer transfers them upon purchase.
So have you got all the papers?
It’s definitely not all about financial spreadsheets when it comes to selling your business; ensure the legal and commercial side of house is also in order.