The risks to avoid when selling your business

business

Selling your business is a huge decision and can be an emotionally challenging one as well. Perhaps you need to sell your company to free up some capital or recover from the pandemic. Business owners put an enormous amount of time, money, and effort into their organisations. It’s important to take your time with the selling process to get the best value possible.

If you want to sell your business, here are a few things to bear in mind.

Don’t make promises you can’t keep

You might feel guilty about selling your business. Try to avoid making promises to employees, clients and suppliers that you can’t keep. Some owners fall into the trap of promising shares and exit bonuses that have not been documented properly.

Prepare for the sale

You need to prepare your business for sale. You might need to give it a little TLC and tidy up the edges. For example, you could look at excessive tax deductions, personal expenses paid through the company and much more. You need to make sure your company books are neat and organised. A buyer will ask their legal and financial advisors to review your contracts and books. You need to make sure all your important documents are properly filed and easy to access.

Be honest about the company

Do not misrepresent your company in an attempt to sell it. Exaggerating profits and lying about clients you have worked with in the past will only result in serious consequences. Be honest about the advantages and disadvantages of the company. You can sell the company using real facts and figures. If you have any investigations and litigation issues, ask your advisors to address these issues. Buyers should be made aware of any potential issues in advance. You need to answer any enquiries from the buyer completely and accurately.

Ask your solicitor for help

Warranties and indemnities should be included in the sale contract. Your solicitor can explain these concepts to you and make sure you avoid liability.

Staffing considerations

You need to make sure your team is secure and stable before you leave. Each person should be in the correct role with the appropriate salary. Your employees need to be able to run the business without you. Once you leave, your company should be a well-oiled machine that doesn’t need you to function.

Sell your business and start an adventure this year. It’s never too late to change your career.

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