Top Tips When Preparing To Sell Your Business
|Author:||Ms Lizzie Wilson|
We're seeing a lot of companies, particularly within the life sciences and technology sectors, being purchased by larger organisations looking to expand their offering.
Through our experience of dealing with companies in an exit situation, we have recognised some common issues that can often cause delays and increase costs if they are left undealt with until the later stages of a transaction.
To address those issues we have established some top tips for you to consider when preparing your company for a sale opportunity.
You are only as good as your team
Get your team of advisors in place at an early stage. Advisors are often overlooked during the early stages of the negotiations as parties seek to keep costs down and deal with negotiations themselves. However, having financial and legal advisors in place throughout these early stages can assist you in obtaining the best and most tax efficient deal and ensure the most value for your business is returned to you. You may find yourself across the table from experienced purchasers who have done this many times over and have learnt over the years how to sell a proposal that may not be as desirable as it first seems when analysed in more detail.
Additionally, it's often the case that signed heads of terms, when scrutinised in a legal context, can be ambiguous or incomplete. This leads to negotiation down the road which could be avoided if legal advisers have the opportunity to comment on the heads of terms before they're entered into.
By getting your advisors in place early, you will be given the support you need to manage the transaction, whilst continuing to run the business.
TOP TIP: Get your team of advisors in place at the beginning of any discussions/negotiations, so that they can assist and support you with the transaction whilst you continue to run your business.
Corporate clean up
Once a deal has been struck and heads of terms are agreed, the purchaser will want to start their due diligence on the target company. This is the purchaser's opportunity to rummage through the target company's records to try and establish if the company has any "dirty laundry" before they pay out the agreed price.
Although a necessary exercise that occurs on all transactions, from a seller's perspective it can feel as though you're being criticised on how you've run the business to date and any significant issues that arise can result in re-negotiation or even stop the deal in its tracks. With that in mind...
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