By failing to prepare, you are preparing to fail, as Benjamin Franklin once said.
Preparation is everything in a company or business sale. You are helping yourself get the best price, addressing any issues early (every company will have some!) and giving yourself more time to get it right.
There are a few key areas you can address early on in order to help yourself.
Take advice
Get advisers on board at an early stage. The right advisers will help you avoid mistakes and pitfalls that could otherwise set you back.
- Accountants – to get your financial ducks in a row. The first thing any potential buyer will want to see is numbers but, first, you need to be happy with them. And if they’re not where you want them to be yet you’ll want to use them to make a plan for growth.
- Corporate Finance – when you’re ready to start thinking about finding a buyer you might not be lucky enough for one to just fall in your lap. Even if they do they might not be the right one or offering the best deal. Corporate finance advisers will help you market your company and find a buyer, negotiate the offer and assist with managing the deal throughout.
- Lawyers – they’re here to make the deal happen. Get them involved when you’re considering the sale. You might want them to look at corporate finance terms to see what you’re signing yourself up for and certainly will want them to look at offers as they come in from a legal perspective. It goes without saying that the lawyers will then deal with all the legal paperwork to get the deal done.
Doing your own due diligence
One of the best uses of your time here is to carry out due diligence on your own company.
The questions a potential buyer will ask are always almost a variation on the same themes so getting those things that won’t change that much ready now (even if you’re looking at selling in five years’ time) will help you later.
Every company will have something that needs to be addressed and it’s much better if you can do that first and present it to the buyer as resolved rather than the buyer picking it up.
Some key areas to focus on would be:
- Contracts – take a look at your contracts, make sure you can find them all and save them somewhere safe. Are there any scary change of control clauses that give the other party a right to terminate in key contracts? Forewarned is forearmed after all.
- Employment – employment contracts, handbooks, policies and so on can be collected now and saved (electronically) somewhere safe. As things change just update the folder.
- Intellectual Property – Do you have any key IP (your website is likely one!)? Who owns it? If someone created this for you, and you don’t have the right piece of paper signed, they likely do. Are the domain names registered in an individual’s name? An easy fix here is to have domain names transferred to the company.
- Statutory Books – dust off your statutory books and make sure these are up to date. These are absolutely key as they are the proof of the shareholders and any inconsistencies in statutory books can set hares running with a potential buyer.
- Property – do you own or lease property, are all the relevant documents, asbestos surveys and so on together.