How we can help
Parkinson Wright can guide you through the process of a business sale, including:
Valuing a business
Business valuations are usually complex, and they involve an understanding of regulations and laws. We can work with other professionals, such as your accountant, to make sure your valuation has a sound legal basis.
Our commercial solicitors can offer you pragmatic advice and help place your business in the best position for sale negotiations. For example, we can examine the shareholders' agreement to ensure it does not contain anything that could negatively impact the valuation of your business.
Heads of Terms
Heads of terms are not legally binding, but they are an agreement in principle between buyer and seller.
Heads of terms include the sale price of a business, the names of the buyer and seller, and the terms and conditions of the transaction. Issues that need to be addressed before the sale completes may be noted in the heads of terms.
Heads of terms can also contain a lockout period which can be legally binding.
A lockout period gives a buyer exclusive rights to buy a business before a certain date. During the lockout period, the buyer will carry out due diligence on the business.
A lockout period can diminish a seller's negotiating position, so it must be for a reasonable length of time. Our solicitors can advise you.
The sale agreement (which is sometimes called an 'asset purchase agreement') is usually prepared by the purchase solicitors.
The contract will contain a number of aspects that protect the buyer. There will be restrictive covenants, warranties, indemnities and various conditions that must be met before the sale can be complete. We can negotiate these terms on your behalf to mitigate the risks to you.
Our commercial team is experienced in negotiating sale contracts for sellers and buyers. We can manage complicated and demanding negotiations, and we always put our clients' interests first.
Your buyer will carry out due diligence to identify any weaknesses in your business that could enable them to negotiate the price.
As a seller, you also need to carry out due diligence to ensure your company sells for its full value. You will need to make sure your business strategy, finances and IT infrastructure are in good order and that all paperwork is up-to-date. Make sure any human resources issues have been dealt with and recover all outstanding debts if you can.
Our commercial team can help you to prepare for the sale by advising you on what documents the buyer will want to see, what questions their solicitors are likely to ask, and what actions you need to take.
When a buyer purchases a business with employees, they cannot legally change the terms of employment contracts. Occasionally a buyer will ask a seller to change employment terms before they buy a business. If you find yourself in this situation, our solicitors can advise you.
We can also help you to undertake your obligations to your employees under TUPE regulations and make sure you comply with employment law.
We can help you explore the most tax-efficient ways to sell your business.
We can also advise you whether you are eligible for Asset Disposal Relief (also known as 'entrepreneurs' relief'). If you are eligible, you will pay 10% CGT rather than the standard 20%.
Potential buyers will see your business's confidential information as part of their due diligence process. Sharing financial information, client lists etc. can put your business in a vulnerable position. In addition, you may not want your employees and customers to know your business is for sale.
We can help to protect your business by drafting a confidentiality agreement tailored to your circumstances.
How to sell a business
This is a step-by-step breakdown of the legal process for business sales:
- Heads of terms are drafted and agreed.
- Due diligence is carried out.
- Sale contract is drafted and negotiated.
- Disclosure. Your solicitor will draft a Disclosure Letter for the buyer. This letter will list any disclosures you would like to make against warranties. Disclosures can prevent the buyer from suing you for breach of contract.
- Additional documents are agreed such as stock transfer forms and letters of resignation from key employees.
- Completion. Once all parties are happy, money will be transferred, and the business sale will be complete.
- Post-completion. Your solicitor will submit relevant paperwork to Companies House and HMRC. It is also likely that you will undertake an in-person handover of the business with the new owner.
What are the risks of selling a business?
There are several potential risks when selling a business:
- Due diligence. It is important to give accurate answers to a buyer's enquiries to prevent claims of misrepresentation.
- Warranties and indemnities. The buyer will request warranties and indemnities, so you will be obliged to pay them if particular circumstances arise. Our solicitors can negotiate these on your behalf, and risks can be mitigated through a Letter of Disclosure.
- Price changes. Sometimes the terms of a sale allow the price of a business to be adjusted once the buyer has more of a complete financial picture. It is important to be aware of this.
- Handover period. If the terms of a sale mean you must complete a practical handover of the business with the buyer, the terms of the handover must be clear. You do not want to spend more time on a handover than you expected.
Our commercial team can advise you about the risks of selling your business and answer all your questions.
Why choose Parkinson Wright solicitors for selling a business?
Parkinson Wright solicitors have years of experience in business buying and selling. We will keep you updated at every stage of your transaction and proactively drive your sale forward.
We have helped people buy businesses of all sizes across a broad range of industry sectors. We have the legal and commercial expertise to help you achieve the best deal possible for whatever business you are selling.
Parkinson Wright solicitors have many accreditations, so you can rest assured that you will receive expert legal advice and the highest level of customer service.
Solicitors Regulation AuthorityRegulated and authorised by the Solicitors Regulation Authority (SRA).
Lexcel Quality MarkWe have achieved the Law Society’s Lexcel Legal Practice quality mark, which sets the standard for client care.
Get in touch
We offer a Free Initial Assessment, so you can call us without charge or obligation to discuss how we can assist you.
To arrange your Free Initial Assessment at a time convenient to you, please call 01905 401 893.