Selling a business involves several important steps to ensure a smooth handover to a new owner — including due diligence, contract drafting, contract review, negotiation, exchange and settlement. LegalVision’s sale of business team assists clients at all stages of their journey.
A sale of business transaction can encompass a wide range of assets. Common examples include intellectual property rights (such as trade marks), real property interests (such as a commercial lease), licences and contracts with suppliers.
Getting your business sale over the line can be complicated. After you’ve agreed on the terms of your deal with a buyer, you still need to go through the formalities of signing contracts (exchange) and finalising the transaction (settlement). LegalVision’s specialist lawyers can help you navigate these final steps of your business sale.
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5 Things You Need to Know About Selling a Business
1Before selling your business, it’s important to be clear on your goals. Are you simply looking for a purchaser who will pay the best price? Do you want to keep a role in the business after the sale? Do you want the purchaser to grow the business? These considerations will affect your strategy for the sale of business process.
2Another important initial question is how you want to achieve your goals. There are two main options. One approach is to sell the legal entity that operates the business. This is done by transferring the shares in a company. Another approach is to sell the assets of the business, without selling the company itself. Each option involves different legal processes and consequences. A business sale (or sale of business) usually refers to the second approach.
3Given the amount of time that it takes to deal with every potential purchaser, it’s important to have a screening process. Your business lawyer or accountant can help you put together a checklist of requirements for interested purchasers. This checklist can be structured as a “term sheet” — a document that sets out the key details of the deal you are offering to buyers.
4Once you’ve decided on a purchaser, you will move forward with negotiating the sale of business agreement. It is generally the seller’s lawyer who will draft the contract for the business sale. If the deal is relatively simple, you might choose to use a standard form sale of business agreement contract provided by the Law Society or Real Estate Institute in your state. If the sale is more complex, you will likely need to add special conditions or prepare a bespoke contract for your transaction. For these transactions, you should work with a lawyer who specialises in business sales.
5As a seller, the main goal of the transaction will be to exit the business for a good price without the need to worry about issues popping up down the track. Your lawyer should focus on protecting your future position and ensuring that you don’t take on unnecessary liabilities after the deal is done.