If you are planning to sell your business in the future, there are several things to consider. Andrew Dongworth, Company and Commercial Solicitor at HRJ Foreman Laws Solicitors, Welwyn Garden City office provides answers to some frequently asked questions about the role a solicitor will play during the process.

To watch the video ‘Legal Tips for Selling Your Business’ click here.

When should I instruct a solicitor to sell my company?

It is best to choose your solicitor as soon as you decide you want to sell your company. This will allow you to work with your solicitor to ensure your business is in good legal health before you sell it.

There may be legal documents or contracts that need to be updated. Importantly, if there are any potential claims that are lurking in the background, it is always better to deal with them prior to taking the business to market.

How can a solicitor help me get the best price for my business?

It is important to work closely with your accountant to prepare the finances and advise on any inefficiencies before you begin the sale process. But a solicitor can also provide an important service early on. For example, we will review the legal aspects of your company, and make sure it is in good legal health. In turn, this will help you make the business more attractive to buyers. If you are presenting an efficient, clean business, a buyer won’t have worry about changing much. Nor will there be a risk of uncovering an issue further down the line that could delay or even halt the sale.

Then, when you have all your ducks in a row and you have accepted an offer from a buyer, we will deal with the necessary legal aspects of the company sale.

What is the legal process for selling my company?

The first step is to answer questions about your company operations and finances from the buyer’s legal team and financial teams. The Company and Commercial legal team at HRJ Foreman Laws Solicitors will work with you to provide the responses in good time. We will also manage the due diligence process to ensure there are no surprises for you or the buyer.

The second step is dealing with the sale contract. It must reflect the heads of terms and provide you with some level of protection against any potential future claims that may arise. This links into the third issue: the disclosure process.

In simple terms, the purchase contract will include warranties. Within the warranties the buyer will ask you as the seller to provide assurances that the business does not have any ongoing issues that it should know about. An example might be if there are some customers who are months behind in paying debts that are owed to the company and they may not be recoverable in the future or potentially if there are any arrears or issues with your PAYE or VAT returns.

How can I protect myself from future claims against a company I have sold?

It is important to fully disclose any possible issues that could occur in the future. For example, if some employees were let go in the past few months and there is a possibility that they may come back and try to bring a claim against the company, or there is a disgruntled supplier or a customer who could make claim against the company then these facts should be disclosed to the buyer. Even if the chances of these events happening are slim, that fact that you have provided full and frank disclosure means that the new owners can’t, at a later stage, come back and make a claim against you as they were in possession of the facts prior to finalising the purchase.

Watch the other video in the series –  ‘What are the top 3 items to kick start your legal health check‘ 

For legal advice email info@hrjforemanlaws.co.uk or call Welwyn Garden City 01707 887701, Hitchin 01462 458711

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